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Raising Capital

Transcript: By: Valeria Torres Raising Capital Claire Kline: The group manger Laila Wilson: Creative builder Valeria Torres: Supporter of Ideas Andrew Lindsey: Keeps everyone on track Our Team Our Team The Problem The Problem Unfortunately, not too long ago, a terrible plague struck the world. It spread all over the big countries, forcing survivors to run to secluded islands. Now, people need somewhere enjoy their new lives. We believe we have the perfect solution. Our solution is to make a creative roller coaster. Our idea is different from anything you might have seen in the past. It is a normal roller coaster for most of it, but towards the end, it has magnetic levitation! Our Solution Our Solution Our Goal Our Goal Our goal is to raise enough money to successfully build our roller coaster. We hope to receive about 25 million dollars. We also want to be able to partner with a steady company in order to receive help and funds. Why Now? Why Now? We need this because we believe that if people don’t get proper entertainment, they may resort to more violent forms of entertainment. Because of the already low population, it would be a tragedy if this were to happen. Conclusion Conclusion We hope that you’ll keep our idea in mind. The whole purpose of our coaster is to help the society become a better place. We also need to help people that need entertainment. We hope that this roller coaster will make sure people are entertained and not bored. We need help with funding. We hope we will be able to do this by finding a business partner. Blueprints Blueprints Shake Table Shake Table Thank you for your time and patience! Thanks

Raising Capital

Transcript: Other Job Opportunities I have had different job offers where I can make more money; like the daycare my sister works at in Fremont ($16/hr). Job and Family Services also gave me a second interview for a social work position, which means they see something in me that could be benefical to their team ($21/hr.). There are other job opportunities out there doing less work, but getting paid more than what I am currently making (I.e. McDonalds is hiring at $17/hr in Ottawa County). Funding Success Statistics The Liveable Wage in Ohio.... 83% of businesses secure funding after effective pitch presentations. The liveable wage in Ohio for a single, working mother to 1 child is $33.89 per hour according to Massachusetts Institute of Technology The Average Salary for Early Childcare is $18 per Hour Building a Strong Business Network 1 Establishing meaningful connections and partnerships is essential for growth and opportunities. 5 My Pay Now 2 6 ReasoWhy I Should Make $19/Hour For working an unkown schedule at $15/hr, I calculated the math to see how much I take home a month. For just the basics, I provided a chart of how much I would make monthly for pay ranges of $15/hr-$21/hr. I would be needing to make $19/hr. to be able to bring something home working 36 hours a week. My Loyalty 3 I am aware that me leaving for Florida wasn't the most loyal I have ever been. However, I saw an opportunity and took it, as anybody would. Since being back from my move, I have worked in 3 differnet rooms, always being bounced around. I have been told one thing, for it to be changed last minute. Not to mention, I didn't even find out through the management team, I found out through the employee. Then, when I am told that I would be in one room after my maternity leave (which I came back from 4 weeks early to help you guys out), I am swithced to a differnet room. Again being the last one to know, as many people were telling me about it before management talked to me. I was told that the baby room did not have a right to tell me about a situation that occured with my daughter. Making me wonder if I would have ever found out about it in the first place if I didn't pry it out of the girls. Which makes me question a lot of things if I am being 100% honest. I have dealt with a lot more than what the average person would. I have been told that I am being taken advantage of, and being walked over by multiple employees, and they aren't wrong. I have considered quitting many times, and if I didn't care for the kids so deeply, I might have. Most of the staff is overworked for the amount that we get paid. We work long hours, and are never sure when we are going to be able to go home to see our families. We are loyal, and we do our jobs well. We have a lot of responsibility taking care of these kids, but you guys know that. Not only do I deserve a pay raise, but so do most of the other girls, considering how much we do for the company. 1 4 5 Reliability My Education I have been employeed with Kiddie Korral since August 2, 2021. Yes, I moved to Florida for 4 months and worked at African Safari in the summer of 2022. However, since starting at the daycare I have: Shown up to work, only calling off when absolutely having to. I come to work early. I call if I am going to be a few minutes late. I stay late. I go to whatever room is needed, My only boundry being that I will not go to the other center. I have helped out in any way I possibly could. I.e., going to graduation in 2023 to help out without getting paid As you know, I already have my bachelor degree in psychology where I studied child development, and brain development for multiple semesters. I am also currently finishing up my master degree classes for my degree in elementary education. It has been brought to my attention that I carry the degree for the building by multiple people. I have the education needed to help the center where needed (i.e., getting our stars up).

RAISING CAPITAL

Transcript: IPO's and Underpricing Issue Costs Taxes and m&m Propotion I the right to go bankrupt is very valuable why : - from an operational standpoint. - to improve a firms competitive positions. Proportionate Ownership In a seasoned issue of stock, the price of the existing stock drops on average by 3 percent on the announcement of the issue. This drop is called the abnormal return. Optimal Capital Structure & The Cost of Capital Plausible reasons for this phenomeon : Right Offering Example Agreements to avoid bankruptcy Optimal Capital Structure If management has superior information about the market value of the firm, it may know when the firm is overvalued. If it does, it will attempt to issue new shares of stock when the market value exceeds the correct value. The weighted average cost of capital is Find EBIT where EPS is the same under both the current and proposed capital structures If we expect EBIT to be greater than the break-even point, then leverage may be beneficial to our stockholders If we expect EBIT to be less than the break-even point, then leverage is detrimental to our stockholders Marketed claims versus nonmarketed claims The Extended Pie Model The Effect Of Leverage Managerial Information Additional new shares = Project cost/Market price = $2,000,000/$5 = 400,000 Shares Outstanding = 1,400,000 ROE = 0.10 NIexpected = ROE x Projected Cost = 0.10 x $2,000,000 = $200,000 Total NI = $1,200,000 THE AFTERMARKET : The period after a new issue is initially sold to the public. For initial public offerings, losses arise from selling the stock below the true value. Liquidation : termination of the firm as a going concern and it involves selling of the assets of the firm E B I T EBIT - Interest Number of rights needed to buy a share of stock = Old shares / New shares Reorganization : is the option of keeping the firm is going concern, it often involves issuing new securities to replace old securities THE GREEN SHOE PROVISION : gives the members of the underwriting group the option to purchase additional shares from the issuer at the offering price. Underpricing EPS = NI/Share outstanding = $1,200,000/1,400,000 = $0.86 Proportion ownership = 5,000/1,400,000 = 0.36% Market price = Price-earning ratio x EPS = 5 x $0.86 = $4.29 (loss $0.71/share) Total book value = $12,000,000 Book value per share (B) = $12,000,000/1,400,000 = $8.57 Stockholders’ wealth can be maximized by maximizing firm value or minimizing WACC 1. Business failure : refer to a situation in which a business has terminated with a loss to creditors. 2. Legal bankruptcy : Firms or creditors bring petitions to a federal court for bankruptcy. 3. Technical insolvency: Technical insolvency occurs when a firm is unable to meet its financial obligations. 4. Accounting Insolvency : firms with negative net worth are insolvent on the books Loss in existing shareholders' value in terms of ownership, market value, book value, or EPS 1 2 3 4 " So the fact that interest is deductible for tax purposes has generated a tax equal to interest payment Market value projected = Market value + Proj. cost + NPV = 5,000,000+2,000,000+1,000,000 = $8,000,000 Market price = $8,000,000/1,400,000 = $5.71 EPS = P/price-earning ratio = $5.71/5 = $1.14 NI = $1.14 x 1,400,000 = $1,600,000 ROE = $1,600,000/1,200,000 = 13% The theory, that a firm borrow up to the point where the tax benefit from an extradollar in debt is exactly equal to the cost that comes form the increased probability of financial distress Liquidation and reorganization Degree of Financial leverage CHOOSING A VENTURE CAPITALIST There are some key considerations in such a case, some of which can be summarized as follows: 1. Financial strength is important 2. Style is important 3. References are important 4. Contacts are important 5. Exit strategy is important " The term venture capital does not have a precise meaning, but it generally refers to financing for new, often high-risk ventures. Individual venture capitalists invest their own money; so-called “angels” are usually individual VC investors, but they tend to specialize in smaller deals. The potential profits are enormous I such cases. To limit their risk, venture capitalists generally provide financing in stages. At each stage, enough money is invested to reach the next milestone or planning stage. The pecking-order theory has several significant implications , a couple of which are at odds with our static trad-off theory : 1. No Target capital structure. 2. Profitable firms use less debt. 3. companies will want financial slack. The Static Theory of Capital Structure _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ The intershield tax Gross spread The issuing firm faces a potential cost if the offering price is set too high or too low. If the issue is priced too high, it true market value, the issuer’s existing may be unsuccessful and have to be withdrawn. If the issue is priced below the shareholders will experience an opportunity loss when the issuer

Raising Capital

Transcript: Raising Capital for your new business = ** Think how your personal interests can become a great source of money ** Tips! Bank Loans Disadvantages: Involves personal feelings. Creates personal and familial issues. Not large amounts of money, generally. Lack of clarity. Demand of money back at short notice can affect your business cash flow. Possible ownership required. Use your hobbies and interests Conclusion: + ` In 1994, director Kevin Smith filmed a movie called ‘clerk’ using ten credit cards which was a huge hit and earned him $3million in theatres Charles Huang, the former partner of Harmonix and designer of the little plastic guitars, used his credit cards to finance the company in 2007 which released a game called "Guitar Hero III: Legends of the Rock“ which grossed the hugest amounts in the recent times No one said it was going to be easy... $2 Conclusion: $18 USAGE OF CREDIT CARDS FOR FUNDING BUSINESS: Venture Capitalists Angels and Investors Materials: + 1. Treat them as if they were strangers. 2. Debt may actually be better than equity. 3. Tie all payments to your cash flow. 4. Consider nonvoting stock. --> Make them feel like are treating with a professional investor. Alternative ways to raise money Materials: Materials: Materials: Direct association Entrepreneur due diligence Promising pitch and business plan Financial projections Management team How to get Funded by a Venture Capitalist ???? Hot air ballon lamp for babies dormitories! $40 Examples of successful ventures using credit cards initiative: Tips! + Advantages: People who loves you won’t scrutinize your work. No due time, no interests. No legal transactions. Don’t need a big effort to convince them. Don’t need a business plan to be shown. By: Ishwor Khanal, Sheylla Tupia Shruteja, Virajitha, Radha Krishna and Thejaswi 1. Tell a story. 2. Highlight your strengths. 3. Accept your baby is ugly. 4. Think big, plan small. $1 Materials: Disadvantages: Only be applied for qualified borrowers. Can decrease cash flows. High interests. Due time might not be accurate. Family & Friends Personal credit cards being one of the easiest way of self funding to get the business off the ground has both rewards and risks If the venture is successful then the simplest way to fund a business will be credit cards but if once it fails then it’s the most riskiest initiative since it puts personal finances into jeopardize $10 $5 Credit cards Advantages: * If qualified borrower loan can take less than an hour. * No ownership required. * Interests are tax deductible. * Makes easy to budget * Easy to compute future payments. Real life example Angels & investors Self- Funding

Raising Capital

Transcript: Traditional your attention! Investment $ 47,665 Disadvantages Advantages Equity Shares Investors Example (seemingly) unlimited number of investors - actually raised: Crowd Funding Management Advantages Peter Thiel and Facebook initial investment $ 1,090 - actually raised: $ 500,000 (10.2 %) no shares How it works management Principal ideal for start-ups initial investment $ 100,000 $ 12.5 m (10 %) goal: high no interest payments no option for small businesses and start-ups Example Advice Rating absolute control of the business no shares (100% ownership) 1999 sold $ 3.8bn worth of shares local What is a credit rating may result in a high interest rate - reward: Advantages Bank Loans profit-sharing (neither interest nor principal) Investment no knowledge, just capital funding copy of the album give out shares (just part-owner) easier to attract small investments knowledge & experience How it works different features pay back interest and principal What is a (e.g. product) "active" self- employed Debt and Equity Funding Application of Funds How it works Loans investor Disadvantages Do you have any funding in combination with knowledge everyone Source of Funds Disadvantages 2. You are the owner of a small but popular café. You would like to expand your business by offering coffee-to-go. In order to realize this project, you need an additional $ 100,000 for new equipment. How would you try to raise this capital? managed - looking for: Variation Stock Market interest payments are tax-deductible 2. Every funding method has advantages rewards The Need to Raise Capital Shares BALANCE SHEET - The Need to Raise Capital - Methods of Raising Capital - Bank Loans - Stock Market - Business Angels - Venture Capitalists - Crowd Funding - Summary (5 Facts) Sequoia Capital and Google 5. A new method is called Table of Contents might not raise enough money possibility of fraud watches with Venture Capitalist? Traditional and Alternative Methods 47 years old Advantages What is better-than-average returns are expected 3. Traditional methods are bank loans and Investments need to find an angel and pitch one's idea - reward: need to find - and convince - a venture capitalist further questions? 1. Crowd Funding is very popular in the U.S. but has not really kicked off yet in Europe. Would you be willing to invest your own savings in a venture presented on a crowd funding website? small Kickstarter.com amounts no (monthly) interest payments product sample Interest to need for collateral (e.g. personal guarantees) no solution for bigger firms, mostly for start-ups Interest How it works Business Crowd Funding? - looking for: returns funds interest and loan payments need to be made on time board of directors CEO: Eric Schmidt Knowledge/ ideas (first outside investment) funding as well as knowledge and advice possible in all business cycles (e.g. IPO) 2001 wide variety of possible investors sold $ 1bn worth of shares Loan How it works position in give up sole control (esp. disinvestment) - actually raised: Example The Need to Raise Capital Shares Shares $ 15,000 Start-Up no need to give out shares (sole control) Investment website 4,000,000 shares Knowledge/ Thank you for crowd funding no obligation to share profits successful businessman knowledge - reward: Business Angel? investment 2004 $ 1,000 1. Every business needs capital give up shares (part of the business) Rewards no absolute control (part-ownership) usually and disadvantages "passive" company Assets Returns unusual Corporation Alternative pressure for good quarterly results today Venture Capitalists 5,000,000 shares Summary can invest Disadvantages Liquidity for Operating Discussion Liabilities Advantages floating shares on the stock exchange disinvestment Business Angels TODAY Individual Raising Capital Disadvantages - looking for: angels and venture capitalists $ 10,266,845 wealthy ($750,000) no interest payments 4. Alternative methods include business obligation to pledge assets as collateral

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