Name and IDs: M.

Rashid Nawaz F2019314012

Mehran Ali F2019314006

Shahzaib Akram F2019314057

Sobia Abbas S2019358005

Submitted to: Dr. Muhammad Ather Ashraf

Submitted by: M. Rashid Nawaz

University of Management & Technology

Assignment 1:

1)Entrepreneurial Finance:

The study of value and resource allocation with respect to new ventures is known as entrepreneurial
finance. It addresses important questions that all business owners face, such as how much capital
can and should be raised, when it should be sought, and from whom. It also covers startup valuation
and the structure of fundraising deals and exit decisions.

2)Investment by Stages:

Seed Money

At the seed stage, the business owner often only needs limited funding to conduct feasibility studies,
create prototypes, assess market demand, protect intellectual property, and consider other facets of
business concept.

Startup Phase

Production begins during the start-up phase, sometimes called the launch phase, and sales take
place. The employment of people and the launching of products in the market are its defining
characteristics. Bridge financing, sufficient working capital for the smooth running of the business,
financing of losses incurred during the start-up phase. The start-up phase and the pre-launch phase
can both be financed simultaneously.

First-Stage Financing Phase

The scale-up phase, commonly referred to as early-stage funding, is the final stage of seed funding. It
is characterized by an increase in sales and production. Sales growth is a sign that the company is
successful because it validates the business concept of the company.

Profitability may be within reach when business volume approaches the break-even point. Venture
capitalists might be interested in funding this phase if the business is profitable during the start-up
phase or if it shows clear evidence that it can be profitable during the ramp-up phase.

Second-Stage Financing Phase

This round of funding comes after the first round and provides working money for the first growth of
a business after it has started producing and distributing goods and building up inventory and
accounts receivable. Even though the business has improved, there are still scenarios where it might
not yet be profitable.

Third-Stage or Mezzanine Financing Phase

This is due to the significant expansion of the business, which has increased sales and is profitable.
These funds will be used to pursue plant expansion, marketing, working capital or the development
of improved products.

Fourth-Stage or Bridge Financing Phase

Bridging funding is the time gap between spending and revenue generation. For example,
government grants often include bridge funding. This is because grants are not paid directly for the
purchase of assets (such as equipment), but are returned to the company after the purchase. Thus,
the bridging loan is complete from the moment the expenditure is made (purchase of equipment)
and the company is reimbursed for the subsidy for the purchase of equipment.

Example: Let us consider the example of Uber funding rounds. Uber, as a mobility service provider,
was a unicorn startup. The company decided to go for a Series G round of funding by issuing shares.
With funding from 116 investors, it managed to go through 32 funding rounds and raise a capital of
25.2Billion.

Investment by Industry:

Industry refers to a specific group of companies that operate in a similar business sphere and have
similar business activities. Industries are created by breaking down sectors into more defined
groupings. Therefore, an industry is a subcategory of a sector. For example, the insurance industry
can be broken up into different, specialized divisions like home, auto, life, and corporate insurance.

Investment by Region: In this form of investment venture capitals invest whether which region
provides lower taxes, higher returns and better opportunities. For example, we have divided below:

Region 1: Southeast Asia, South Asia (except Pakistan and Afghanistan) and the Pacific Islands.

Region 2: Afghanistan, Pakistan, Central Asia, East Asia, West Asia, Europe, Africa, North America
and Latin America.

3)What is the major reason that there is some difference in Angel and Venture Capitalist, what are
different people called involved in VCs.

Angel Investors Venture Capitalist

Angel investors are usually wealthy Venture capitalists, on the other
individuals or groups who fund start- hand, are usually large institutions
up businesses. Maybe you are an that invest large sums of money in
entrepreneur yourself and want to established and proven businesses.
support new business ideas and find Venture capitalists focus on later-
high profit potential. Angel investors stage companies with the potential
often have smaller holdings than for growth and high returns. They
venture capitalists, but they generally want to invest in companies that
provide more personal advice and have a clear path to scalability and
guidance than venture capitalists, so profitability, and tend to take a
they can be more involved in the "hands-off" approach to investing,
day-to-day operations of the relying on company management for
company. . decision making. of decision.
The other People involved in Venture capitals are called GPs (General
Partners) and LPs (Limited Partners).