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

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

,TABLE OF CONTENTS
oo oo oo




Partoo1:ooTHEooENTREPRENEURIALooENVIRONMENT.
1.ooIntroductionootooo

FinanceooforooEntrepreneurs.
2.ooDevelopingootheooBusinessooIdea.
Partoo2:ooORGANIZINGooANDooOPERATINGooTHEooVENTURE.
3.ooOrganizingooandooFinancingooaooNewooVenture.
4.ooPreparingooandooUsingooFinancialooStatements.
5.ooEvaluatingooOperatingooandooFinancialooPerformance.
Partoo3:ooPLANNINGooFORooTHEooFUTURE.
6.ooManagingooCashooFlow.
7.ooTypesooandooCostsooofooFinancialooCapital.
8.ooSecuritiesooLawooConsiderationsooWhenooObtainingooVentureooFinancing.
Partoo4:ooCREATINGooANDooRECOGNIZINGooVENTUREooVALUE.
9.ooProjectingooFinancialooStatements.
10.ooValuingooEarly-StageooVentures.
11.ooVentureooCapitalooValuationooMethods.
Partoo5:ooSTRUCTURINGooFINANCINGooFORooTHEooGROWINGooVENTURE.
12.ooProfessionalooVentureooCapital.
13.ooOtherooFinancingooAlternatives.
14.ooSecurityooStructuresooandooDeterminingooEnterpriseooValues.
Partoo6:ooEXITooANDooTURNAROUNDooSTRATEGIES.
15.ooHarvestingootheooBusinessooVentureooInvestment.
16.ooFinanciallyooTroubledooVentures:ooTurnaroundooOpportunities?
Partoo7:ooCAPSTONEooCASES.
Caseoo1.ooEco-Products,ooInc.
Caseoo2.ooSpatialooTechnology,oo

,Chapteroo1
INTRODUCTIONooTOooFINANCEooFORooENTREPRENEURS

FOCUS

Theoopurposeooofoothisoofirstoochapterooisootooopresentooanoooverviewooofoowhatooentrepreneurialoofinanceoois
ooabout.ooInoodoingoosoooweoohopeootoooconveyootoooyouootheooimportanceooofoounderstandingooandooapplyin
gooentrepreneurialoofinanceoomethodsooandootoolsootooohelpooensureooanooentrepreneurialooventureooisoosucc
essful.ooWeoopresentooaoolifeoocycleooapproachootoootheooteachingooofooentrepreneurialoofinanceoowhereooweoo
coverooventureoooperatingooandoofinancialoodecisionsoofacedoobyootheooentrepreneurooasooaooventureooprogres
sesoofromooanooideaoothroughootoooharvestingootheooventure.

LEARNINGooOBJECTIVES

LOoo1.1:ooCharacterizeootheooentrepreneurialooprocess.
LOoo1.2:ooDescribeooentrepreneurshipooandoosomeoocharacteristicsooofooentrepreneurs.
LOoo1.3:ooIndicateooseveraloomegatrendsooprovidingoowavesooofooentrepreneurialooopportunities
.ooLOoo1.4:ooListooandoodescribeootheoosevenooprinciplesooofooentrepreneurialoofinance.
LOoo1.5:ooDiscussooentrepreneurialoofinanceooandootheooroleooofootheoofinancialoomana
ger.ooLOoo1.6:ooDescribeootheoovariousoostagesooofooaoosuccessfulooventure‘soolifeoocycle.
LOoo1.7:ooIdentify,oobyoolifeoocycleoostage,ootheoorelevantootypesooofoofinancingooandooinves
tors.ooLOoo1.8:ooUnderstandootheoolifeoocycleooapproachoousedooinoothisoobook.

CHAPTERooOUTLINE

1.1 THEooENTREPRENEURIALooPROCESS
1.2 ENTREPRENEURSHIPooFUNDAMENTALS
A. WhoooisooanooEntrepreneur?
B. BasicooDefinitions
C. EntrepreneurialooTraitsooorooCharacteristics
D. OpportunitiesooExistooButooNotooWithoutooRisks
1.3 SOURCESooOFooENTREPRENEURIALooOPPORTUNITIES
A. SocietalooChanges
B. DemographicooChanges
C. TechnologicalooChanges
D. EmergingooEconomiesooandooGlobalooChanges
E. Crisesooandoo―Bubbles‖
F. DisruptiveooInnovation


1

, 1.4 PRINCIPLESooOFooENTREPRENEURIALooFINANCE
A. Real,ooHuman,ooandooFinancialooCapitaloomustoobeooRentedoofromooOwnersoo(Principleoo#1)
B. RiskooandooExpectedooRewardoogoooHandooinooHandoo(Principleoo#2)
C. WhileooAccountingooisootheooLanguageooofooBusiness,ooCashooisootheooCurrencyoo(Principleoo#3)
D. NewooVentureooFinancingooInvolvesooSearch,ooNegotiation,ooandooPrivacyoo(Principleoo#4)
E. AooVenture‘sooFinancialooObjectiveooisootoooIncreaseooValueoo(Principleoo#5)
F. ItooisooDangerousootoooAssumeoothatooPeopleooActooAgainstooTheirooOwnooSelf-
Interestsoo(Principleoo#6)
G. VentureooCharacterooandooReputationoocanoobeooAssetsooorooLiabilitiesoo(Principleoo#7)
1.5 ROLEooOFooENTREPRENEURIALooFINANCE
1.6 THEooSUCCESSFULooVENTUREooLIFEooCYCLE
A. DevelopmentooStage
B. StartupooStage
C. SurvivalooStage
D. Rapid-GrowthooStage
E. Early-MaturityooStage
F. LifeooCycleooStagesooandootheooEntrepreneurialooProcess
1.7 FINANCINGooTHROUGHooTHEooVENTUREooLIFEooCYCLE
A. SeedooFinancing
B. StartupooFinancing
C. First-RoundooFinancing
D. Second-RoundooFinancing
E. MezzanineooFinancing
F. Liquidity-StageooFinancing
G. SeasonedooFinancing
1.8 LIFEooCYCLEooAPPROACHooFORooTEACHINGooENTREPRENEURIALooFINANCEooSU
MMARY


DISCUSSIONooQUESTIONSooANDooANSWERS

1. Whatooisootheooentrepreneurialooprocess?

Theooentrepreneurialooprocessoocomprises:oodevelopingooopportunities,oogatheringooresources,ooando
managingooandoobuildingoooperationsoowithootheoogoalooofoocreatingoovalue.

2. Whatooisooentrepreneurship?ooWhatooareoosomeoobasicoocharacteristicsooofooentrepreneurs?

Entrepreneurshipooisootheooprocessooofoochangingooideasoointooocommercialooopportunitiesooandoocreatin
goovalue.o o Whileoothereooisoonoooprototypicalooentrepreneur,oomanyooareoogoodooatoorecognizingoocom
mercialooopportunities,ootendootooobeoooptimistic,ooandooenvisionooaooplanooforootheoofuture.

3. Whyoodooobusinessesoocloseooorooceaseoooperating?ooWhatooareootheooprimaryooreasonsoowhyoobusinessesofail?