Discussion 3 – Week 5
1) Watch the following video. These two groups are major sources of funding for entrepreneurs other than banks.
Please comment on the pros and cons of working with each group. In addition, address question #6, page 317 in the Spinelli text. Provide a thorough discussion including at least 5 references. Please post as text in the DB.
2) This is related to the struggle of someone who wishes to take the leap into entrepreneurship but also wants life to remain the same — the reluctant entrepreneur. Gerber goes on to say, ‘The reluctant entrepreneur does not want to wrestle with the stranger. ….. the reluctant entrepreneur wants to stay busy, busy, busy doing what she knows how to do until it bores her to tears or frustrates her to death.’
Does this ring true to your experiences? Have you ‘wrestled with a stranger?’ To the extent you are comfortable, share your story.
Also, reply to this post:
1) When starting a company, funding is one of the first things that entrepreneurs and business owners need to think about. According to the U.S. Small Business Administration, how you choose to fund your business could affect how you structure and run your business. (Fund your business,n.d) There is no one size fits all when choosing ways to fund and who one uses or how they go about it is crucial. Some choose to self-fund their business which allows them to have complete control over the business but also opposes a decent risk if the company fails. Another route business owners take when financing startups is through angel investors and venture capitalists. Many people mistakenly equate angel investors with venture capital financing. (Firm, 2022) Like each business, each form of funding is different and should be discussed with an adviser before acting.
An angel investor is a private investor that focuses on financing smaller businesses in exchange for equity (Angel Investors,n.d) .Since AIs use their own money to invest in companies which can be looked at as a pro and con. It can be looked at as a benefit to businesses because since they are using their own money AIs are not going to invest in something they do not believe will succeed. In the video Ian Sobieski says that AIs want to be mentors and look for personal achievement so they are not going to invest large amounts of their own money in a business they do not feel they cannot be an asset to (Sobieski, I. [Kauffman Founders School],2015). On the contrary the disadvantage of AIs is that since they are investing their own money it may not be a lot compared to Venture Capitalists and sometimes AIs want to own as low as 10% all the way up to 50% of the company, they invest in. (Angel Investors,n.d)
Venture capitalists are private equity where investors provide compensation to small businesses or startups with the potential to grow in longevity. Typically, Vcs are wealthy money managers who invest other peoples money. (Vernon, 2020) A advantage to using a Vc is that they will invest large amounts of money in a business they feel will be successful. To justify the effort and time spent Vcs will invest 1 million dollars or more. However, Vcs do not have the motivation to invest like angel investors do because they are investing in businesses with someone else’s money (Sobieski, I. [Kauffman Founders School],2015). Another disadvantage is that Vcs want to have a great deal of ownership in the company in exchange for funding.
6) There are plenty of other sources of capital besides venture capitalists and angel investors. One type is applying for a Small Business Administrations 7(a) Guaranteed Business Loan Program. This type of capital is offered to small businesses that do not qualify for venture capital. However, if they apply for the SBA 7a loan program they will almost guarantee that the startup will receive some sort of funding. Another way for entrepreneurs to receive capital for their business is through small business investment companies which allow small businesses to qualify for assistance and receive funding from one or more commercial banks, wealthy individuals, and the investing public. (Spinelli & Adams,2016)
2) Personally, I have wrestled with a stranger in my career. In fact, I currently am wrestling with a stranger. I work on the athletic performance side of things at our university but in the broad spectrum I work in collegiate athletics which is an ever-changing career sector. Coaches and even athletes are constantly changing university for a multitude of reasons:
