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

,SOLUTION MANUAL FOR v v




Entrepreneurial Finance,7th Edition J.Chris Leach (Author), Ronald v v v v v v v v




W. Melicher (Author)
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Chapter 1-16 With Cases Products &Spatial Tech
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Chapter 1 v




INTRODUCTION TO FINANCE FOR ENTREPRENEURS v v v v




v FOCUS

The purpose of this first chapter is to present an overview of what entrepreneurial finance is
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vabout. In doing so we hope to convey to you the importance of understanding and applying
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v entrepreneurial finance methods and tools to help ensure an entrepreneurial venture is
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vsuccessful. We present a life cycle approach to the teaching of entrepreneurial finance where
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v we cover venture operating and financial decisions faced by the entrepreneur as a venture
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v progresses from an idea through to harvesting the venture.
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LEARNING OBJECTIVES v




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
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v 1.4: 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.
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vLO 1.6: Describe the various stages of a successful venture‘s life
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v cycle.
LO 1.7: Identify, by life cycle stage, the relevant types of financing and
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vinvestors. LO 1.8: Understand the life cycle approach used in this book.
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CHAPTER OUTLINE v




1.1 THE ENTREPRENEURIAL PROCESS v v



1.2 ENTREPRENEURSHIP FUNDAMENTALS v



A. Who is an Entrepreneur? v v v



B. Basic Definitions v



C. Entrepreneurial Traits or Characteristics v v v



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



1.3 SOURCES OF ENTREPRENEURIAL OPPORTUNITIES v v v



A. Societal Changes v



B. Demographic Changes v



C. Technological Changes v



D. Emerging Economies and Global Changes v v v v



E. Crises and ―Bubbles‖ v v



F. Disruptive Innovation v

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, 2 Chapter 6: Managing Cash v v v




1.4 PRINCIPLES OF ENTREPRENEURIAL FINANCE v v v



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)
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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 v



B. Startup Stage v



C. Survival Stage v



D. Rapid-Growth Stage v



E. Early-Maturity Stage v



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



A. Seed Financing v



B. Startup Financing v



C. First-Round Financing v



D. Second-Round Financing v



E. Mezzanine Financing v



F. Liquidity-Stage Financing v



G. Seasoned Financing v



1.8 LIFE CYCLE APPROACH FOR TEACHING ENTREPRENEURIAL
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vFINANCE SUMMARY v




DISCUSSION QUESTIONS AND ANSWERS v v v




1. What is the entrepreneurial process?
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The entrepreneurial process comprises: developing opportunities, gathering resources, and
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vmanaging and building operations with the goal of creating value.
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2. What is entrepreneurship?
v v What are some basic characteristics of entrepreneurs?
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Entrepreneurship is the process of changing ideas into commercial opportunities and v v v v v v v v v v



vcreating value. While there is no prototypical entrepreneur, many are good at
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vrecognizing commercial opportunities, tend to be optimistic, and envision a plan for the
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v future.

3. Why do businesses close or cease operating?
v v v v v v What are the primary reasons why
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businesses fail?
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