SOLUTION MANUAL For Entrepreneurial Finance, 7th Edition by J. Chris Leach, Ronald W. Melicher, Chapters 1 - 16, Complete With CAPSTONE CASES

SOLUTION MANUAL For Entrepreneurial Finance, 7th Edition
by J. Chris Leach, Ronald W. Melicher, Chapters 1 - 16,
Complete With CAPSTONE CASES

,TABLE OF CONTENTS
12 12 12




Part121:12THE12ENTREPRENEURIAL12ENVIRONMENT.
1.12Introduction12to12

Finance12for12Entrepreneurs.
2.12Developing12the12Business12Idea.
Part122:12ORGANIZING12AND12OPERATING12THE12VENTURE.
3.12Organizing12and12Financing12a12New12Venture.
4.12Preparing12and12Using12Financial12Statements.
5.12Evaluating12Operating12and12Financial12Performance.
Part123:12PLANNING12FOR12THE12FUTURE.
6.12Managing12Cash12Flow.
7.12Types12and12Costs12of12Financial12Capital.
8.12Securities12Law12Considerations12When12Obtaining12Venture12Financing.
Part124:12CREATING12AND12RECOGNIZING12VENTURE12VALUE.
9.12Projecting12Financial12Statements.
10.12Valuing12Early-Stage12Ventures.
11.12Venture12Capital12Valuation12Methods.
Part125:12STRUCTURING12FINANCING12FOR12THE12GROWING12VENTURE.
12.12Professional12Venture12Capital.
13.12Other12Financing12Alternatives.
14.12Security12Structures12and12Determining12Enterprise12Values.
Part126:12EXIT12AND12TURNAROUND12STRATEGIES.
15.12Harvesting12the12Business12Venture12Investment.
16.12Financially12Troubled12Ventures:12Turnaround12Opportunities?
Part127:12CAPSTONE12CASES.
Case121.12Eco-Products,12Inc.
Case122.12Spatial12Technology,12

,Chapter 1 12



INTRODUCTION12TO12FINANCE12FOR12ENTREPRENEURS

FOCUS

The12purpose12of12this12first12chapter12is12to12present12an12overview12of12what12entrepreneurial12finance12is12abou
t.12In12doing12so12we12hope12to12convey12to12you12the12importance12of12understanding12and12applying12entrepren
eurial12finance12methods12and12tools12to12help12ensure12an12entrepreneurial12venture12is12successful.21We12present
12a12life12cycle12approach12to12the12teaching12of12entrepreneurial12finance12where12we12cover12venture12operating

12and12financial12decisions12faced12by12the12entrepreneur12as12a12venture12progresses12from12an12idea12through12to

12harvesting12the12venture.



LEARNING12OBJECTIVES

LO121.1:12Characterize12the12entrepreneurial12process.
LO121.2:12Describe12entrepreneurship12and12some12characteristics12of12entrepreneurs.
LO121.3:12Indicate12several12megatrends12providing12waves12of12entrepreneurial12opportunities.2L1
O121.4:12List12and12describe12the12seven12principles12of12entrepreneurial12finance.
LO121.5:12Discuss12entrepreneurial12finance12and12the12role12of12the12financial12manager.21L
O121.6:12Describe12the12various12stages12of12a12successful12venture‗s12life12cycle.
LO121.7:12Identify,12by12life12cycle12stage,12the12relevant12types12of12financing12and12investors.21
LO121.8:12Understand12the12life12cycle12approach12used12in12this12book.

CHAPTER12OUTLINE

1.1 THE12ENTREPRENEURIAL12PROCESS
1.2 ENTREPRENEURSHIP12FUNDAMENTALS
A. Who12is12an12Entrepreneur?
B. Basic12Definitions
C. Entrepreneurial12Traits12or12Characteristics
D. Opportunities12Exist12But12Not12Without12Risks
1.3 SOURCES12OF12ENTREPRENEURIAL12OPPORTUNITIES
A. Societal12Changes
B. Demographic12Changes
C. Technological12Changes
D. Emerging12Economies12and12Global12Changes
E. Crises12and12―Bubbles‖
F. Disruptive12Innovation


1

, 1.4 PRINCIPLES12OF12ENTREPRENEURIAL12FINANCE
A. Real,12Human,12and12Financial12Capital12must12be12Rented12from12Owners12(Principle12#1)
B. Risk12and12Expected12Reward12go12Hand12in12Hand12(Principle12#2)
C. While12Accounting12is12the12Language12of12Business,12Cash12is12the12Currency12(Principle12#3)
D. New12Venture12Financing12Involves12Search,12Negotiation,12and12Privacy12(Principle12#4)
E. A12Venture‗s12Financial12Objective12is12to12Increase12Value12(Principle12#5)
F. It12is12Dangerous12to12Assume12that12People12Act12Against12Their12Own12Self-
Interests21(Principle12#6)
G. Venture12Character12and12Reputation12can12be12Assets12or12Liabilities12(Principle12#7)
1.5 ROLE12OF12ENTREPRENEURIAL12FINANCE
1.6 THE12SUCCESSFUL12VENTURE12LIFE12CYCLE
A. Development12Stage
B. Startup12Stage
C. Survival12Stage
D. Rapid-Growth12Stage
E. Early-Maturity12Stage
F. Life12Cycle12Stages12and12the12Entrepreneurial12Process
1.7 FINANCING12THROUGH12THE12VENTURE12LIFE12CYCLE
A. Seed12Financing
B. Startup12Financing
C. First-Round12Financing
D. Second-Round12Financing
E. Mezzanine12Financing
F. Liquidity-Stage12Financing
G. Seasoned12Financing
1.8 LIFE12CYCLE12APPROACH12FOR12TEACHING12ENTREPRENEURIAL12FINANCE21SUMM
ARY


DISCUSSION12QUESTIONS12AND12ANSWERS

1. What12is12the12entrepreneurial12process?

The12entrepreneurial12process12comprises:12developing12opportunities,12gathering12resources,12and2m
1 an

aging12and12building12operations12with12the12goal12of12creating12value.

2. What12is12entrepreneurship?12What12are12some12basic12characteristics12of12entrepreneurs?

Entrepreneurship12is12the12process12of12changing12ideas12into12commercial12opportunities12and12creating2v1 al
ue.1 2 While12there12is12no12prototypical12entrepreneur,12many12are12good12at12recognizing12commercial12o
pportunities,12tend12to12be12optimistic,12and12envision12a12plan12for12the12future.

3. Why12do12businesses12close12or12cease12operating?12What12are12the12primary12reasons12why12businesses2f1ail?