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

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Part 1: THE ENTREPRENEURIAL ENVIRONMENT.
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1. Introduction to
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Finance for Entrepreneurs.
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2. Developing the Business Idea.
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Part 2: ORGANIZING AND OPERATING THE VENTURE.
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3. Organizing and Financing a New Venture.
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4. Preparing and Using Financial Statements.
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5. Evaluating Operating and Financial Performance.
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Part 3: PLANNING FOR THE FUTURE.
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6. Managing Cash Flow.
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7. Types and Costs of Financial Capital.
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8. Securities Law Considerations When Obtaining Venture Financing.
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Part 4: CREATING AND RECOGNIZING VENTURE VALUE.
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9. Projecting Financial Statements.
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10. Valuing Early-Stage Ventures.
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11. Venture Capital Valuation Methods.
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Part 5: STRUCTURING FINANCING FOR THE GROWING VENTURE.
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12. Professional Venture Capital.
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13. Other Financing Alternatives.
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14. Security Structures and Determining Enterprise Values.
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Part 6: EXIT AND TURNAROUND STRATEGIES.
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15. Harvesting the Business Venture Investment.
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16. Financially Troubled Ventures: Turnaround Opportunities?
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Part 7: CAPSTONE CASES.
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Case 1. Eco-Products, Inc.
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Case 2. Spatial Technology,
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,Chapter 1 GB




INTRODUCTION TO FINANCE FOR ENTREPRENEURS GB GB GB GB




FOCUS

The purpose of this first chapter is to present an overview of what entrepreneurial finance is about. In d
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oing so we hope to convey to you the importance of understanding and applying entrepreneurial finance
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methods and tools to help ensure an entrepreneurial venture is successful.We present a life cycle approac
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h to the teaching of entrepreneurial finance where we cover venture operating and financial decisions fac
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ed by the entrepreneur as a venture progresses from an idea through to harvesting the venture.
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LEARNING OBJECTIVES GB




LO 1.1: Characterize the entrepreneurial process.
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LO 1.2: Describe entrepreneurship and some characteristics of entrepreneurs.
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LO 1.3: Indicate several megatrends providing waves of entrepreneurial opportunities.LO 1.
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4: List and describe the seven principles of entrepreneurial finance.
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LO 1.5: Discuss entrepreneurial finance and the role of the financial manager.LO 1.
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6: Describe the various stages of a successful venture‘s life cycle.
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LO 1.7: Identify, by life cycle stage, the relevant types of financing and investors.LO 1.
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8: Understand the life cycle approach used in this book.
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CHAPTER OUTLINE GB




1.1 THE ENTREPRENEURIAL PROCESS GB GB




1.2 ENTREPRENEURSHIP FUNDAMENTALS GB




A. Who is an Entrepreneur? GB GB GB




B. Basic Definitions GB




C. Entrepreneurial Traits or Characteristics GB GB GB




D. Opportunities Exist But Not Without Risks GB GB GB GB GB




1.3 SOURCES OF ENTREPRENEURIAL OPPORTUNITIES GB GB GB




A. Societal Changes GB




B. Demographic Changes GB




C. Technological Changes GB




D. Emerging Economies and Global Changes GB GB GB GB




E. Crises and ―Bubbles‖ GB GB




F. Disruptive Innovation GB




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, 1.4 PRINCIPLES OF ENTREPRENEURIAL FINANCE GB GB GB




A. Real, Human, and Financial Capital must be Rented from Owners (Principle #1)
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B. Risk and Expected Reward go Hand in Hand (Principle #2)
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C. While Accounting is the Language of Business, Cash is the Currency (Principle #3)
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D. New Venture Financing Involves Search, Negotiation, and Privacy (Principle #4)
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E. A Venture‘s Financial Objective is to Increase Value (Principle #5)
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F. It is Dangerous to Assume that People Act Against Their Own Self-
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Interests(Principle #6) B
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G. Venture Character and Reputation can be Assets or Liabilities (Principle #7)
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1.5 ROLE OF ENTREPRENEURIAL FINANCE
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1.6 THE SUCCESSFUL VENTURE LIFE CYCLE
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A. Development Stage GB




B. Startup Stage GB




C. Survival Stage GB




D. Rapid-Growth Stage GB




E. Early-Maturity Stage GB




F. Life Cycle Stages and the Entrepreneurial Process
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1.7 FINANCING THROUGH THE VENTURE LIFE CYCLE GB GB GB GB GB




A. Seed Financing GB




B. Startup Financing GB




C. First-Round Financing GB




D. Second-Round Financing GB




E. Mezzanine Financing GB




F. Liquidity-Stage Financing GB




G. Seasoned Financing GB




1.8 LIFE CYCLE APPROACH FOR TEACHING ENTREPRENEURIAL FINANCESUMMA
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DISCUSSION QUESTIONS AND ANSWERS GB GB GB




1. What is the entrepreneurial process?
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The entrepreneurial process comprises: developing opportunities, gathering resources, andmanagi
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ng and building operations with the goal of creating value.
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2. What is entrepreneurship? What are some basic characteristics of entrepreneurs?
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Entrepreneurship is the process of changing ideas into commercial opportunities and creatingvalue.
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While there is no prototypical entrepreneur, many are good at recognizing commercial opportunitie
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s, tend to be optimistic, and envision a plan for the future.
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3. Why do businesses close or cease operating? What are the primary reasons why businessesfail?
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