Venture Financing And Planning Studies

With the transition of economy and development of science and technology, entrepreneurship or new business venture has showed greater significance to national economy. The vitality and flexibility of entrepreneurial enterprises are visibly exhibited in the competitive and changing market, while financing problem becomes one of the major obstacles to their development. Having this problem solved is crucial to the healthy growth of entrepreneurial enterprises.Based on the review of relevant theories and concepts, the dissertation gives its own definition of"entrepreneurship"and divides the entrepreneurial process into 4 stages—Pre-startup Stage, Start-up Stage, Growth Stage and Maturity Stage. Besides, the main business characteristics and corresponding financial needs and decisions of each stage are analyed within the framework of Timmons Model. Moreover, using the Decision Tree Model, the thesis makes it clear that financial analysis and stage-based planning are necessary to the breakthrough of the entrepreneurial financing bottleneck.The dissertation summarises the present financing situation of Chinese entrepreneurial enterprises as relying too much on internal financing and with narrow financing channels of which indirect ones are partly blocked while direct ones are underdeveloped. Since it is relatively more difficult for entrepreneurial enterprises to obtain external debts, equity financing, especially venture capital turns out to be an effective way for them to pursue while making financial decisions. Equity financing channels like venture capital requires the determination and allocation of enterprise value, which is also included in the core parts of entrepreneurial financing. Traditional value estimation methods demonstrate limitations when used to calculate the value of entrepreneurial enterprises because of the high uncertainty of their development in the future. Relating the growing opportunities of entrepreneurial enterprises to real options, the thesis applies the Binomial Tree Model to the calculation of such enterprises'value and the DerivaGem software is introduced to simplify its computational process.Finally, a case is used to illustrate the stated principles, framework and core elements of fiancing analysis and planning for entrepreneurial enterprises.