Artificial Intelligence : Finance for Entrepreneurs

FINANCE FOR ENTREPRENEURS 1
FINANCE FOR
ENTREPRENEURS

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Part 1: Artificial Intelligence:
Sub part 1:
The concept of artificial intelligence and machine learning is very much related with one
another. The concept of Artificial intelligence is the science and the engineering that makes
the intelligence machines, this holds good especially in the case wherein the computer
programs are used. Both of these concepts are fairly general and generalised in this world.
The puzzles are solved and the various different goals are achieved thereby recognising the
objects and the sounds that are involved. The behaviour of the machine is not merely an
outcome of any input but is also affected by the body and the environment in which the same
is physically embedded in. in order to keep the same simple, one could write a program
which is simple and it can be artificial intelligence. The machine learning is the science
which is connected with the construction of the intelligence computer programs and the deep
learning is the part of the machine learning which no exception is (Frontiers in, 2019).
Sub part 2:
The data catalogue that the company uses ensure that the users have an insight into the
accuracy of the data, the quality and the usefulness. This is the technical metadata which is
captured by the system. The data catalogue is able to take into account the behavioural
content of the data that is likely to consider the facts from the data sources. By the way of
parsing down the query logs which is used for the access the data during the normal work of
the data. This works on the following insights:
 Using the data through the top users, well known columns, tables and the schemas
 Providing an insight into the distribution of data
 Providing a visual map of wherein the data came from and where the data is ongoing
on and the way in which the data has been moved.

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AI also uses the learning algorithm which is fed in by the Wiki pages, various other
spreadsheets etc. (Alation, 2019).
The company has had about 4 total funding rounds and successfully raised about $ 82 million
(Crunch base, 2019).
The company had raised the above stated amounts by January 17, 2019 and the same had
been raised from the Series C funding.
Require Crunchbase login access.
Sub part 3:
Require Crunchbase login access.
The following are the desired details:
 Sevan Multisite solutions which has the total funding amount of $17.5 million. It
delivers data analytics, virtual tours, surveys, design, and program management and
construction services. By the way of using artificial intelligence, the company
optimises the new builds, rebuilds, remodelling and the renovations.
 Ninox is the company having the total funding of an amount of $3 million. The
company empowers the line of business teams to automate the back office flows with
the help of developer.
 Dameng Database is the company having the total funding of an amount of CNY 100
million. The company provides professional database products and also the
technology service.

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 Aerospike which is the company having the total funding of an amount of 62 million.
the company delivers the hybrid memory of the database in the real time with the big
data applications (Crunchbase, 2019).
Part 2: Financing when things go wrong:
Sub part 1:
Many people are of the view that a start up pivot is a failure, they state the fact that the
company has had a bad marketing or bad hiring decision. It is due to this reason that the
product fails.
Pivoting shows courage. It takes courage to admit what went wrong about the original model
and then make the changes in the new product (Leen, 2019).
Hence, the given statement is not true.
Sub part 2:
A down round is when the private company offers some additional shares at a lower rate or
price when compared with the price or the rate the same were offered in the previous period
of financing. In simple words, the company requires more capital and the company realises
that its valuation is lower than when compared with the previous round of financing (UP
counsel, 2019).
Sub part 3:
An anti-dilution provision is to protect the investors from dilution of their equity position
which takes place when the number of the shares outstanding increases due to a decrease in
the owners % in the company. The shares increase due to the issue of the new shares.

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This provision helps in the adjusting the conversion price of the preferred stock to the
common stock price which is the way through which the common stock holders are protected
(Corporate finance institute, 2019).
The broad based weighted average anti-dilution is when the preferred stock is converted into
the additional shares of the common stock which is not like ratchet provision in which the
size of the adjustment depends upon the number of the shares that are sold in connection with
the existing stock along with the difference in the price of the stock.
Full ratchet:
Suppose a company is planning to start a round of financing in order to finance its expansion
plan. Its current structure comprises of common stock of 1, 00,000, preferred stock round of
$1 per share of 500,000 and preferred stock round of $2 shares off 1,000,000 (Cooley GO,
2019).
The company wants to have another round of financing of $2,000,000 at an amount of $0.05
per share and has the plan of raising $1,000,000.
The company goes on to adjust the shares held by the preferred stock holders in round 1 and
2 in order to prevent the excessive dilution of their respective stake. This merely means that
the preferred stock in the round 1 which has been issued at the rate of @1 per share and the
preferred stock in round 2 at $0.50 per share in the third round. This ownership would be
diluted due to a lower priced round.
In the first adjustment of preferred stock the $1 share shall be reduced at $0.50 when it comes
to converting the preferred stocks to the shares of the common stock which yields at the ratio

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of 2:1. Hence, 500,000 preferred stockholders shall be converted into 1,000,000 common
stocks.
It means that the preferred stock in round 1 issued at a price of $1/share and the preferred
stock in round 2 issued at a price of $2 each will be adjusted to the price of $0.50/share of the
new preferred stock in the third round of financing, and their ownership will not be as diluted
due to the new lower priced round.
It means that the preferred stock in round 2 issued at a price of $1/share will be adjusted to
the price of $0.50/share in round 3 which brings the ratio of conversion at 4:1 which makes
the total common stockholders in round 3 to 4,000,000.
Part 3: Founder and employee remuneration:
Sub part 1:
An executive member of a new start up shall be paid enough to make sure that he is
productive at work. He may not be complacent by the size of his bank account. The founders
are given what they need, not what they really want. When the funds of this company are
greed, then it would mean more funds in order to pay the employees and more runway in
order to get the company in the market and capturing more market share (Start ups, 2019).
Sub part 2:
The following are the 3 different forms of equity:
Stockholders equity
Owners’ equity
Common stock
They have the following advantages for the company:

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 Committed to the business and the intended projects
 It is used as capital for the business activities
 It helps in exploring and executing growth ideas
 It helps in ensuring the providing the desired follow up
They have the following disadvantages for the company:
It is demanding costly and time consuming when being issued
It requires many regulatory requirements
It loses a certain power to make the decisions when it comes to management issues
(NI business info, 2019).
They have the following advantages for the employees:
They provide an opportunity for the finance home run
It had no downside risk
It provides many taxation benefits (Chase, 2019).
They have no disadvantage from the perspective of an employee.
Sub part 3:
The following are some of the considerations from the perspective of company:
Can the company survive on lower salary
What is his plan in 4 years
How strong does on believe in the company (HBR, 2019).
The following are some of the considerations from the perspective of company:
The experience of the employee
The level of his position

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His criticality to the company
His loyalty and service to the company.
Sub part 4:
It would be more effective since after 5 years, the company shall be more established in the
business and the employees shall have more compensation in the form of the market shares of
the company (HBR, 2019).
Part 4: Entrepreneur Ecosystem in Sydney:
The eligibility is the start-ups in the country. The ecosystem partnership program is the one
which has been designed for the public sector companies, government and the municipalities
al around the globe. These companies want to promote and map the local start up ecosystem.
They provide the 6 comprehensive ecosystem development modules (The Founder Institute,
2019).
The accelerators include Muru-D, which supports the digital start-ups in the Asutralasian
region. The capital that these accelerator contribute is $60,000 along with the other perks
such as the working space, networking opportunities and the boot camps.
The second is Blue Chilli which is founded by Sebastien Eckersley Maslin, Bluechilli which
provides the tart up with an easy stage funding, technology IP and the expert skills
(StartupBlink Blog, 2019).

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References
Alation. (2019). Deriving Insight From AI - Alation. [online] Available at:
https://www.alation.com/deriving-insight-ai/ [Accessed 17 Dec. 2019].
Chase, P. (2019). Advantages and Disadvantages of Equity Compensation. [online]
Massachusettsbusinesslawyer.com. Available at:
https://www.massachusettsbusinesslawyer.com/index.php?/advantages-disadvantages-equity-
compensation [Accessed 17 Dec. 2019].
Cooley GO. (2019). Definition of Broad-Based Weighted-Average Anti-Dilution Protection -
Cooley GO. [online] Available at: https://www.cooleygo.com/glossary/broad-based-
weighted-average-anti-dilution-protection/ [Accessed 17 Dec. 2019].
Corporate Finance Institute. (2019). Full Ratchet - Overview, How it Works and Practical
Example. [online] Available at:
https://corporatefinanceinstitute.com/resources/knowledge/strategy/full-ratchet/ [Accessed 17
Dec. 2019].
Harvard Business Review. (2019). CEO Incentives—It’s Not How Much You Pay, But How.
[online] Available at: https://hbr.org/1990/05/ceo-incentives-its-not-how-much-you-pay-but-
how [Accessed 17 Dec. 2019].
Harvard Business Review. (2019). Compensation and Benefits for Startup Companies.
[online] Available at: https://hbr.org/1989/01/compensation-and-benefits-for-startup-
companies [Accessed 17 Dec. 2019].
LeenBlogging. (2019). Wei Leen's Blog. [online] Available at:
http://weileen.me/posts/pivoting-is-not-failure [Accessed 17 Dec. 2019].

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nibusinessinfo.co.uk. (2019). Advantages and disadvantages of equity finance. [online]
Available at: https://www.nibusinessinfo.co.uk/content/advantages-and-disadvantages-
equity-finance [Accessed 17 Dec. 2019].
Startups.com. (2019). Founder Compensation: The Good, Bad, and Suicidal. [online]
Available at: https://www.startups.com/library/expert-advice/founder-compensation-the-
good-the-bad-and-the-suicidal [Accessed 17 Dec. 2019].
UpCounsel. (2019). Down Round | UpCounsel 2019. [online] Available at:
https://www.upcounsel.com/down-round [Accessed 17 Dec. 2019].
www.crunchbase.com. (2019). Sevan Multi-Site Solutions. [online] Available at:
https://www.crunchbase.com/organization/sevan-multi-site-solutions [Accessed 17 Dec.
2019].
www.frontiersin.org. (2019). Machine Learning and Artificial Intelligence. [online]
Available at: https://www.frontiersin.org/articles/10.3389/fdata.2018.00006/full [Accessed 17
Dec. 2019].
StartupBlink Blog. (2019). Sydney Startup Ecosystem - StartupBlink Blog. [online]
Available at: https://www.startupblink.com/blog/sydney-startup-ecosystem/ [Accessed 19
Dec. 2019].
The Founder Institute. (2019). Founder Institute: World's premier idea-stage accelerator &
startup launch program.. [online] Available at: https://fi.co/apply/sydney [Accessed 19 Dec.
2019].