through your financial services firm, vestin capital, INC., you have raised a po

Question

through your financial services firm, vestin capital, INC., you have raised a pool of money from clients. you intend to invest it in new business opportunities. to prepare for this endeavour, you decide to answer the following questions:

1. what are some of the challenges of financing entrepreuneurial growth companies (EGCs)?
2.what are the different types of venture capital funds?
3. what are some choices for organizing a venture capital firm?
4. in what ways should a venture capital firm structure its investments?
5. should venture firms use convertible securities?
6. what are some of the exist strategies that may be available to a venture capital firm?

Explanation / Answer

Entrepreneurs play a vital role in economic development as key contributors to technological innovation and new job growth. Further, entrepreneurs help build communities in ways such as providing jobs, conducting business locally, creating and participating in entrepreneurial networks, investing in community projects, and giving to local charities. Realizing both the economic and social impact of entrepreneurship, many states and local communities have implemented aggressive strategies aimed at cultivating and nurturing entrepreneurs. In order for governments to effectively develop policies that will foster entrepreneurship, they must first understand the difference between entrepreneurs and small business owners, common misconceptions about entrepreneurs, and where entrepreneurs are located. Using this information, combined with entrepreneurial strategies outlined by the National Governors Association (NGA) Center for Best Practices, state governments can develop specific and effective measures to support entrepreneurs. While cursory inspection shows entrepreneurial growth companies (EGCs) and small business owners have a lot in common, there are certain distinct differences between the two. Controlled growth and continued profitability are the goal for many small businesses while EGCs are generally geared toward rapid growth and productivity gains. In addition, EGCs often have significant economic effects on a community, accounting for a large portion of new job growth, making the support of them essential. To better understand entrepreneurs, several common myths must also be dispelled. Though there are always exceptions, most of the common perceptions of entrepreneurs do not apply to most EGCs. Common myths cite that entrepreneurs: take uncalculated risks; start companies with a break-through invention; have years of experience in their industry; have detailed business plans with extensive research; and start the company with ample financial resources. In fact, most of these factors are rarely the entrepreneurial norm. Since entrepreneurs provide significant economic and social benefits, and can be found in nearly every industry sector in every Labor Market Region in the country, many states have implemented entrepreneur-friendly policies in an effort to support local entrepreneurial efforts. Leading states have specific entrepreneurial goals incorporated into their strategic plans. Several entrepreneurial strategies for state's have emerged as best practices identified by the National Governors Association Center for Best Practices. Securing capital is important to the success of entrepreneurs, particularly in the early stages of development. States can assist entrepreneurs in finding seed capital through direct investment, investments in venture capital limited partnerships and tax credits. Providing technical assistance with the creation of small business assistance centers, science and technology corporations, and programs that provide financial and management guidance are valuable services for entrepreneurs. Streamlining securities regulation eases the process entrepreneurs must go through in the search for capital. Improving state regulations and licensing environments reduces the burden on entrepreneurs seeking licenses and permits. One-stop business centers can serve as a point of contact between entrepreneurs and all state regulatory agencies. Streamlining the registration and license process can have benefits for both entrepreneurs and state agencies by reducing the duplication of processes, paperwork, time and resources needed to properly register a new business venture. Encouraging entrepreneurs in education builds a foundation for successful entrepreneurial ventures. In higher education, building intellectual capital at state universities fosters entrepreneurship while superior research centers aid universities in attracting and retaining top-quality faculty, spur technological innovations, and aid in the transfer of technology to the private sector. Education at the secondary level is important as well to at least raise the awareness of entrepreneurship as a career option. Creating industry clusters and entrepreneurial networks are beneficial to economic development strategies and entrepreneurs. Entrepreneurs can develop contacts and fill specialized industry niches within clusters and networks. Targeting entrepreneurs through state economic development offices and business development centers can help educate them on available services and programs. Advertisements in trade publications, communications through local chambers of commerce, industry associations, and public service announcements are just a few ways governments can effectively get the message out.

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