What is entrepreneurial finance?

Entrepreneurial finance is at the center of a clash of two very distant worlds: that of entrepreneurship and that of finance. Finance is disciplined, based on numbers and logical thinking and looking for proven track records. Entrepreneurship is messy, based on intuition and experimentation and treading off the beaten track.

What could be riskier but also more exciting than being at the center of this clash? Something new and big might come out of it:  the creation of innovative companies that disrupt industries and business models, generate wealth, and improve people’s lives. Welcome to entrepreneurial finance!

The main goal in this book is to understand how entrepreneurial companies are funded. Entrepreneurial finance is the provision of funding to young, innovative, growth-oriented companies. Entrepreneurial companies are young, typically less than ten years old, and  introduce innovative products or business models. The younger are called “start-ups,” and are typically less than five years old.

Entrepreneurial companies are growth-oriented. This sets them apart from small businesses or SMEs (Small and Medium sized Enterprises), which are largely created to achieve only limited grow (500 employees in the US, 250 in the EU). The funding needs of entrepreneurial companies and SMEs are very different, as are the types of investors that cater to them.

Our book provides a deep understanding of they whole fundraising cycle, from the moment the entrepreneur conceived her idea to the moment investors exit the company and move on. We examine the entrepreneur's signalling to investors of the qualities of the venture, the investors' evaluation of the venture, the various dimensions of contracting (cash flow rights, control rights, compensation, and other clauses), the negotiation of a deal and the provision of corporate governance, the process of staged financing, the financing through debt, and the exit process.

There is a bewildering variety of investors who can finance entrepreneurial companies: family and friends, business angels, accelerators and incubators, crowdfunding platforms, venture capital firms, corporate investors, etc.  Our book provides a thorough understanding of what motivates them, of the way they invest, and of what support they can provide to a company.

This complex world can be confusing, especially to inexperienced entrepreneurs. Our book examines all these issues and explains them in a clear, accessible language. This website also provide many usable tools that can be used both for pedagogical exercises and in real applications.