Financial Investments for Entrepreneurs

As an overview, I will start everyone off with this blog series by giving you a glossary of most used financial investment terms and forms of funding. These are the ones an entrepreneur should get familiarized with before jumping into access to finance for their future or an ongoing, current business that she wants to see grow and be fed by investment. It is important to know there are more funding options out there but also an entrepreneur is to be aware of her strengths and weaknesses to be able to attract the most suitable option for her business.
 

Firstly, to start us off with the broadest general terms capturing this blog topic,what is Finance?
 

Simply put, it is the blood of your business. No money, no game. As people cannot live without blood circulation, a business cannot strive without money coming in and out of its system.
 

What is Investing?
 

Investing is any act of putting your money or capital into an effort, which is expected to increase that amount and multiple the money you started with. As you can imagine, such efforts or attempts, endeavors… differ. They are also called investment vehicles and can include: stocks, bonds, mutual funds, or real estate, or starting your own business.
 

Bank Loan?Money borrowed from a bank to be repaid to the bank through agreed period of time and with interest rate attached to it.Erste Bank Micro-Companies and Start-Ups services

Government Incentive?Government measures taken in form of grants, tax relieves etc. in order to stimulate economy or a specific industry within it.  Example: HAMAG Invest; Policies and Schemes for Women Entrepreneurs in India

Grant? Money donated by an organization (or government) for a particular purpose. Example: EBRD

Public-Private Partnership?Also known as PPP, P3 or P3, it refers to a government service or private business, funded and operated through a partnership of government and one or more private sector companies. Best practice example for schools from Croatia; Public Private Partnership in the European Union - Experiences in the UK, Germany and Austria

Academic Scholarship?A financial award given to a student by an organization or school (university) the student is attending to cover his / her tuition and living expenses. Scholarship money is not to be repaid. Example: IvanaHodak Foundation in Croatia; Scholarship Data Base Portal in Serbia;American College of Management and Technology scholarship

Venture Capital (VC)? An investment made into a start-up, a new business or a project; such an investment thus includes significant risk though it is assumed that the new business has a high potential for success and growth. Example: Advent Venture Partners

Private Equity (PE)?Investments made by investors or funds directly into private companies, and which are not publicly traded on a stock exchange. They are raised from retail and institutional investors. Such money is used to fund new technologies, expansions, acquisitions, or simply to strengthen company’s balance sheet.Example: Charterhouse Capital Partners

Business Angels?Also known as Angel Investors are wealthy, entrepreneurial individuals who invest in a business with expectations to make money out of it, i.e. provide capital in return for a proportion of the company equity. They usually seek smaller of a proportion of company equity than in the case of a private equity investments. Example: CRANE; EBAN

Investment Fund?A firm that is investing in companies expecting to make a profit out of it. Example: Sector Funds – Mutual Funds - Fidelity

Working capital?Capital used for daily business operation (current assets minus the current liabilities).Example

We have begun with a few key terms to provide a foundation for beginners.  We will build on this base with more insights into what financial instruments are right for different types of enterprises and at different points in the business lifecycle.  If you are already experienced with finance and have more in depth questions, please write to me at jelena.debeljak@investforthefuture.biz and I will try to address issues from our readers in future posts.

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