Читать книгу Business Plans For Dummies - Paul Tiffany - Страница 42

As you may expect, the world of venture capitalists has a language all its own. Most of it has to do with the various types of financing available — which in turn is closely tied to the different stages of a company’s development. Here’s what you need to know:

 Seed financing: The money you need to prove that your basic business concept is a rock-solid one that can generate streams of additional funding. Seed financing may go into building a prototype of your very cool new technology; this is called “proof of concept.” Or it can be used to conduct market research to show that customers really want what you have to offer.

 Start-up financing: The initial level of investment required to get your business off the ground. You can use the funds for everything from assembling your business team to developing your product or service, testing it, and bringing it to market.

 First-stage financing: Additional money that comes in after your initial start-up funds run out. You often use the funds to support further growth by ramping up new product development, production, marketing, or your sales efforts.

 Second-stage financing: Money raised further down the road after your business has initially proven itself. You typically use the funds to allow the company to expand even more by supporting growth in all areas of the company’s operations.

 Mezzanine financing: We’re not talking about buying theater tickets here. Mezzanine means in between. In a theater, the mezzanine level is between the orchestra and the first balcony. In the business arena, mezzanine financing falls between an equity investment and a standard bank loan. The money allows your company to expand in a particular direction without necessarily having to give up additional ownership in the business.

 Bridge financing: Like a bridge over troubled waters, this kind of financing can help your company over temporary rough spots. For example, you sometimes use short-term bridge loans before an Initial Public Offering (IPO) to smooth out any working capital needs that may occur before the IPO is completed. When the latter occurs, the bridge loan is paid off with the proceeds.