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Entrepreneurial finance and private equity

Entrepreneurial success requires the ability to both obtain finance and to manage it appropriately.

Awareness of the characteristics of the various sources of funding is crucial to entrepreneurs seeking investment. Potential investors will want to be presented with a range of clear and detailed company financial information on which to base their investment decisions.

Principal sources of funding may be oriented around developed countries but investors invest globally.

The ability to critically analyse this information is also essential for entrepreneurs to identify and overcome risks and challenges that may face a company during its growth.

Topics covered

  • Entrepreneurs and Finance
  • Evaluating Entrepreneurial Projects
  • Evaluating the Entrepreneurial Firm
  • The Entrepreneur’s Perspective on Value
  • Choice of Finance
  • The Informal Sources of Finance: Bootstrap and Crowdfunding
  • The Formal Providers of Equity Business Angels and Venture Capitalist
  • Debt Finance – Bank Lending 
  • Trade Credit
  • Harvesting

Learning outcomes

If you complete the course successfully, you should be able to:

  • Understand the importance of finance and financial data to the success of entrepreneurial firms
  • Describe the different methods by which a company is valued and the issues linked to start-up/entrepreneurial firm valuation when raising funds
  • Appraise balance sheets, income statements, cash flows and other firm financial information and be able to analyse and critically evaluate these in the context of an entrepreneurial firm seeking investment
  • Use real options as a tool to evaluate firm’s choice and value
  • Analyse and compare possible sources of financing for an entrepreneurial firm including various types of private equity, debt financing and non-traditional sources
  • Identify some of the risks of failure of an entrepreneurial firm and consider how these can be prevented.
  • Consider exit strategies and explain the investment harvesting process
  • Numeracy and quantitative data skills (including the ability to interpret quantitative data from financial statements)
  • Effective written communication skills for formulating plans, strategies and outcomes
  • Time management skills (including working under time pressure)
  • Problem solving skills (e.g. analytical, problem-solving and decision making skills in entrepreneurial finance)
  • The ability to synthesise and use financial information and knowledge effectively in theentrepreneurial sector
  • Digital and information literacy skills

Assessment

This module is assessed by:

Coursework (30% weighting):

  • There is one item of coursework for this module which contributes to the final assessment mark forthis module:
  • Coursework: a written essay of a maximum of 2,000 or 2,500 words (deadline – weeks 9-12) The coursework is designed to check student progress, extend and reinforce concepts covered and also test individual performance.

Examination (70% weighting):

  • The final piece of assessment will be an unseen written examination of 2 hours’ duration.

Essential reading

The following is provided as part of the course materials after you register:

  • Smith & Smith, Entrepreneurial Finance, Stanford University Press, 2011
  • Cumming, The Oxford Handbook of Entrepreneurial Finance, OUP, 2012

Module author

Dr Lutao Ning

Dr Lutao Ning

MA (London), MBA (Liverpool), PhD (Cambridge)

Dr Lutao Ning is a Senior Lecturer (research track) in International Business at Queen Mary. He has previously worked as Lecturer in International Business at Durham Business School, Durham University, and was a visiting fellow at the Chinese Academy of Social Science and Peking University. His multidisciplinary background ranges from international business, open innovation, strategic management, development studies, and spatial economics.

He has successfully designed and delivered international business courses at all levels, including executive and full-time Financial Times-ranked MBA programmes at a number of international institutions.