Chp15

• - Retained Earnings
• - Sale of Bonds
• - Sale of Stock
• - Loans

Financing for new often high risk ventures - aka Early stage financing

• - wealthy people
• - aka as "Angels"

• - these can be insurance companies.
• - retirement plans, 401k
• - large companies
• - colleges and universities
• - Venture Capital Companies themselves
• - Bane Capital (Mitt Romney)

cash, inventory, accounts receivables, and marketable security

• - Is a large market but access to it is limited
• - it is also expensive affair
• - Typical Terms
• - 40% of equity (ownership of the company)
• - Preferred stock which has a stated divend with voting rights
• - Seats on the board of directors

• - Terms are required
• - Financial strength
• - Experience
• - References
• - Exit strategy

- Securities Act of 1933 - applies to all new securities.

• - Official board of director approval
• - Prepare a registration statement for SEC
• - SEC reviews the above request , there is a 20 day work day period when they make this decision.
• - securites can't be sold til effective date
• - these were standard 1933 procedures

• - Get cash offer
• - Rights off sale to existing share holders
• - IPO , Initial Public Offering

• the best for the company selling the stock , the under writer buys all of the shares right out and assumes
• responsibility for any unsold shares

UW will sell as much as they can. and return the rest to the Co

price is determined by competitive bidding. Used for smaller amounts of shares that need to be sold

where the UW can go back and sell more shares at the offering price

• also know as Making the market, they want to sell 100k shares , 20K still needs to be sold still and there is not
• much interest in it. Artificially create interest by getting the company to buy some shares

• allows the Co. through the basic procedure but decide not to go ahead with the sale. They have a 2yr window
• to hold it if they want until the time is right to sell

Determine the offering price on stock or the interests rate on bonds