BUSM1313 Entrepreneurial Finance: Case Study on Technopreneurship

This document provides a comprehensive case study analysis of entrepreneurial finance, focusing on technopreneurship and the financing processes involved. It begins by defining technopreneurship and its key characteristics, emphasizing the integration of technology, innovation, and entrepreneurship. The analysis then critically examines the statement that start-ups should prioritize investors (business angels and venture capitalists) over bank financing in the early stages, supporting the discussion with relevant literature. The case study further explores the four financing stages of a business start-up: seed stage, A stage, B stage, and exit stage, detailing the activities and key players involved at each stage. It also differentiates the sources of financing for non-tech companies. Finally, it examines the decision-making process of venture capital groups (VCGs) in Germany, Bulgaria, and Switzerland, and assesses how financial positions of startups can be accessed. This assignment is a detailed analysis for the BUSM1313 Entrepreneurial Finance course.

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Entrepreneurial Finance

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Table of Contents
Question 1..................................................................................................................................3
Question 2..................................................................................................................................3
Question 3..................................................................................................................................4
Question 4..................................................................................................................................5
Question 5..................................................................................................................................5
a).............................................................................................................................................5
b)............................................................................................................................................6
References..................................................................................................................................7

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Question 1
Technology is the main need of the global economy and it is required to be used in all the
businesses. There is a need for the new innovation with the help of the new technology and
the entrepreneur who performs the innovations with the help of technology is identified as a
technopreneur. The process of performing the same or can be said that integration of the
innovation, entrepreneur and technology is identified as technopreneurship. By this, the
advancements are made and that helps in undertaking developments with the help of
specialized skills.
The main characteristics of technopreneurship include the high investment which is required
in the process of development and market introduction. In this process, the focus is made on
all the areas and not only on the financial aspects (Okorie et al., 2014). The new ideas,
innovations, technology and other areas are also taken into account. In the process of
innovation under this approach, the consideration of strategy and development is also
involved in addition to the economic factors. This will be helping the business grow in such a
manner that it will attain the major share and will be attracting most of the people. There will
be new ideas and products which will be available and so they will be able to gain the
attention of the audience. By this popularity will be made and the image will be created in the
market which will help in attaining the set objectives and goals for the successful operations.
Question 2
Funding is required in all the businesses and for that, there are various sources that are
present and they shall be taken into consideration. Investors are involved who will be willing
to make the investment and for that, they are convinced by the business. They are the main
source on which the focus is made by all the start-ups and new companies. This is because of
the no cost which is to be incurred for the same (Rosly et al., 2015). The business
process which is involved is considered for the undertaking of financing processes. The
making of the product from the initial stage of idea development is a complex process and
shall be modeled and formalized in an effective manner. There are various actors who are
involved in this process and they have the same goal that the idea is converted into the
product so that the profits can be gained with the help of that.

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This will be made possible when there will be appropriate structure and flexibility which will
be involved in the management of the tasks. This will be made possible when the complete
understanding of the involved process will be gained. The process will be developed properly
and also the funds will be collected. In order to attain this, the support of the investors is
required by the new businesses and start-ups (Scarlat, 2014). Stakeholders will have to
understand the process so that they are ready to provide the required support to the company.
Due to this, they focus on convincing the investors and in this situation bank financing cannot
be considered. This is because the bank will not have any interest other than interest and so
will not be supporting the business. It will not be able to understand the process which is
involved and also the cost involved with the bank financing is high which will make the
proposal to be less profitable. At the initial stage, the high cost cannot be borne by the start-
ups and young companies.
Question 3
The start-ups are required to follow various stages of financing at the time of foundation and
they include the following explained below:
Seed stage: This is the first stage that is required to be undertaken and one the business enters
the market and moves to the growth stage then this stage is completed. In this, there is a time
period of around 1.5 years to 2 years which is involved. There is the need for high investment
which is difficult in this stage as the products are still not in the market. There are high risk
and complexity which is involved and that also makes the financing difficult. Investors can
participate in the venture capital fund in young companies (Selvarani and Venusamy, 2015).
They will be investing in the start-up even though the high risk is involved with the
innovation stage. The potential investors involve angel investors, crowdfunding and others.
A stage: This is the second stage and when the product, market and funding has been
considered then, this stage arises. Product development is considered in this stage and the
investors are provided with the preferred stocks. The model for the business is prepared and
scalable market blueprints are also developed. The investment in this stage is made by
accelerators and venture capitalists.
B stage: The growth is made in this stage for the fulfillment of customer requirements. All
the needs of the consumers are considered and then the steps to fulfill them are undertaken.

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The focus is made on market share increment and dealing with the competitors who are
involved in the industry. The late-stage VC’s make the funding at this level.
Exit stage: When the complete developments are made and business is in running position
this stage arises. Under this, the business model is working and more funds are looked for so
that the expansion can be made. The new products are developed by which the entry in the
new market will be made and proper expansion will be made (Walker, 2012). The acquiring
of all the other firms which are under-performing is also considered in this stage. The private
equity funds, hedge funds and banks are the main sources for funding.
Question 4
In the non-tech company, there are different sources of finance that are available. In that the
personal investment is also made in the business as the amount which is required is not much.
In this business, there are no technological advancements which are to be incorporated and so
the requirement of the funds is limited at this stage. In this condition, the Government grants
will be considered as there is support from the government to certain industries that they want
to develop (Amiri et al., 2014). There are various grants which are provided by the
government to the start-ups so that they can grow and come forward in the market.
Angels are also the main source of the funds for the new businesses as they invest an amount
of around $25000 to $100000. They take the right to supervise the management practices of
the company in return for the risk which is involved with the investment of the funds.
The financing from bank loans is also considered and this will be made available with the
help of a good track record. The bank will be checking the background and fulfilling all the
conditions the loan is granted by the bank.
All of these are the main sources that are considered by the non-tech companies for the
purpose of investment which is required. With the help of them, the business will be able to
make developments and enhance the business to a new level.
Question 5
a)
The manner in which financing decisions reach the three countries is provided below:

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VCG Germany: The application documents are received by the manager who critically
evaluates the plan involved. The term sheet is prepared by the technopreneur and manager in
case he is convinced with the idea otherwise the application is rejected. In the term sheet, all
the negotiation conditions are specified and they are signed. The additional investigation is
carried by the manager with the help of internal and external experts. The approval will carry
the process of funding further but if the expert refuses then the complete process will be
declined.
VCG Bulgaria: In this country, the investor will be providing the idea and the registration
which is in the form of the questionnaire. The application made to the investment manager is
evaluated by the committee and they decide its eligibility (Velikova, Kohler and Gerten,
2014). If the approval is made then the due diligence process is carried and in that
recommendations are made for VCG. The workshops are carried in which details about the
idea and entrepreneur is obtained. Once the workshop is convinced the process will be
completed.
VCG Switzerland: In this, the financial condition is focused and for that technical proof and
market entry proof is considered. The social skills and revenues of the applicant are
considered for the purpose of financing decisions.
b)
The financial position of the start-ups can be accessed with the help of proof that is available
for the technical concept which is involved in the form of market prototypes. The customer
reference will be considered to prove the market entry, and revenues that are projected will be
taken into account (Dolatabadi and Meigounpoory, 2013). All of them will be considered to
assess the financial position so that the correct decision is made.

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References
Amiri, A.R., Kanesalingam, K., Cro, S. and Casey, A.T. (2014) Does the source of funding
and conflict of interest influence the outcome and quality of spinal research?. The Spine
Journal, 14(2), pp.308-314.
Dolatabadi, R.V. and Meigounpoory, M.R. (2013) Effective Determinants of Corporate
Nano-Technopreneurship Process in Active Technological Knowledge Base
Firms. International Journal of Academic Research in Economics and Management
Sciences, 2(5), p.137.
Okorie, N.N., Kwa, D.Y., Olusunle, S.O.O., Akinyanmi, A.O. and Momoh, I.M. (2014)
Technopreneurship: An urgent need in the material world for sustainability in
Nigeria. European Scientific Journal, 10(30).
Rosly, H.E., Junid, J., Lajin, N.F.M. and Rahim, H.L. (2015) The Relationship of Creativity
and Technopreneurship Intention. International Academic Research Journal of Social
Science, 1(1), pp.8-15.
Scarlat, C. (2014) Technopreneurship-An Emerging Concept. FAIMA Business &
Management Journal, 2(3), p.5.
Selvarani, A. and Venusamy, K. (2015) A study of technopreneurship in small and medium
industry. Technopreneurship as a firm strategy: links to innovation, creation and
performance. Journal Impact Factor, 6(1), pp.401-408.
Velikova, D., Kohler, J., and Gerten, R. (2014) Case study on financing and business
development processes in technopreneurship. Reading: Academic Conferences International
Limited. [Online] Available at
https://search-proquestcom.ezproxy.lib.rmit.edu.au/docview/1674837912?accountid=13552
[Accessed 31 March 2020]
Walker, K. (2012) The technopreneurship process: Academic entrepreneur university spin-
offs. RIThink, 2, pp.11-22.

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