POE

False. These factors determine an individual’s intention to behave in a certain way, which influences behavior indirectly.

Covers all financial aspects of entrepreneurship and venture investing. Includes financial modeling, deal structuring, and strategic value creation. Applies to all stages of venture development, from startup to exit.

More of a good better than less of a good. Present wealth better than future wealth. Safe assets better than risky assets.

Financing decisions: Contracts between investors and entrepreneurs, scale of operations. Investment decisions: Investment value depends on future cash flows and associated risks.

Entrepreneurial: Investment and financing are inseparable. Corporate: Investment and financing are independent.

Entrepreneurial: Inability to diversify risks. Corporate: Diversification at low cost.

Entrepreneurial: Require managerial guidance. Corporate: Passive role (no management services).

Entrepreneurial: Challenging to communicate investment potential. Corporate: Does not significantly affect managers’ investments.

Entrepreneurial: New ventures’ tangible assets are real options. Corporate: Only stocks are treated as real options.

Entrepreneurial: Low cash flow. Corporate: Focused on cash flow generation.

Entrepreneurial: Maximizing value for entrepreneurs (financial claims). Corporate: Maximizing shareholder return on investment.

Weigh the value of acting now versus the expected value of waiting. Example: Deciding whether to cut trees today or wait for them to grow larger.

Make decisions under uncertainty or wait until it is resolved. Example: Choosing between two jobs before buying a house near one of them.

Expand: Increase the scale of a venture. Contract: Downsize operations to adapt to conditions.

Alter the mix of the production process in response to market prices. Example: Decision between electricity or natural gas.

Right to discontinue an activity and redeploy the assets to other use. Example: Close a store.

Opportunity, Development, Start-up, Early Growth, Expansion, Exit.

Preparation of business plan. Assess opportunity and strategic alternatives. Abandon/modify concept.

Research and Development before start of revenue generation. Build research team, test market. You can continue to next stage, extend financing, modify R and D strategy, or abandon.

Start of production and marketing. Build starting inventory, sales. You can continue to next stage, modify production, marketing, or financing, or abandon.

Period before sales sufficient for cash-flow breakeven. Expand team as needed, update business model. You can continue to next stage, extend stage/financing, abandon.

Period after breakeven and before sustainable viability. Obtain expansion financing. Work toward proven viability. You can continue to next stage or extend stage/financing.

Establish continued financing and enabling early investor harvest. Obtain continuing financing, early investors harvest, update business model. Choose form of exit.

Does not depend on investors’ assessment. Entrepreneur’s own resources or from friends and family (savings). Stage: Opportunity and Development.

Individual freelance investors. Willing to invest over long horizons. Often bring significant industry experience and active involvement. Stage: Opportunity and Development.

Internally managed: attempts to keep good ideas from "escaping." Externally managed: may seek only financial returns or strategic investments. Stage: Opportunity and Development.

Limited Partners provide most of the capital. General partner is responsible for managing the fund. Focused on equity investment in high-risk ventures with large potential return. Stage: Start-Up.

As entrepreneurs who require tangible assets can lease. Tax advantages to leasing as compared to owning. Stage: Start-Up.

Many countries have established agencies to support small business formation. Eg. SBA, SBIC, SBIR, EXIST Forschungstransfer, Gründerstipendium. Stage: Start-Up.

Arises whenever a business makes a purchase from a supplier that offers payment terms. Largest source of external short-term financing in the U.S. More important in emerging economies. Stage: Early Growth.

Can enable a business concept to grow rapidly by using capital from franchisees. Eg. Subway, McDonald's. Stage: Early Growth.

Interest is tax deductible. But cash flow required for interest and principal payments. Stage: Expansion.

Subjectivity: involves subjective judgments due to limited data availability. Risk assessment: consider risks associated with venture. Future potential: focus on growth, technology, market, and scalability. Funding stage: depends on funding stage.

Venture valuation is the process of determining the estimated worth or value of a startup or early-stage company.