Question

Question 2.
Required:
	(a)			If you could choose between a €100,000 non-refundable grant from a public authority and a €25,000 investment in exchange for equity from a serial entrepreneur (smart money), which one would you choose? Please give reasons for your answer.
		(b)	Describe the key features of the ‘virtuous cycle of a venture capital fund’.
		(c)	Investors in start-ups need to know what is going on in the companies they invest in. Explain why key metrics are needed for effective and efficient monitoring by investors. Next, for a specific business model of your choice (e.g. brick-and-mortar retail store) outline the type of information an entrepreneur should provide to the investor.
			(Total: 50 marks)

It's from Private Equity and Venture Capital

Answer 1

Key features of Virtuous Cycle of venture capital Funding:

1. It suggests money that will fuel a startup's growth down the road. We all called it seed funding.

2. It offers opportunity to demo a solution to major investors which in turn help to expand the horizon of product coverage.

3. In the phase of startup capital, companies look to begin marketing and advertising the product and acquiring customers.

4. In the phase of Bridge or pre-public stage:

- It supports for Merger and Acquisition     - It helps for price reductions/other measures to drive out competitors    - It also supports towards financing for the step towards initial public offerings.

5. In the phase of expasions -      - It helps to enable expansion to additional markets      - It supports for the diversification & differentiation of product line