Financial Management

If entrepreneurship is defined as the relentless pursuit of an opportunity, and finance is defined as the study of the generation and allocation of cash, and risk to create value for the enterprise, then entrepreneurial finance refers to generating and managing cash and risk in order to create value in the relentless pursuit of opportunity.


Simply put, finance is management. Finance is a way of thinking about cash, risk and value. It helps to view problems from perspectives that concentrate on creating value. When viewed from the financial perspective, some decisions will turn out to be illogical or unfeasible, and so should be abandoned.


This unit focuses on the important topic of generating financing and managing those funds. It discusses sources of personal financing, which are all common in start-up firms. These sources include an entrepreneur using his or her personal funds, bootstrapping, and borrowing from friends and family.


The unit also addresses common sources of both equity funding and debt financing namely venture capital, initial public offerings, business angels, commercial banks and guaranteed loans. The unit also discusses concepts such as financial projections and creating financial statements. It identifies and discusses key success factors and common pitfalls. The unit concludes by identifying strategies for raising finance, and discussing briefly the notion of an elevator pitch.


Learning Objectives 

When you have successfully completed this unit you will be able to:

  • Explain why most entrepreneurial ventures need to raise money at some point during their early life.
  • Identify the sources of personal, equity and debt financing available to entrepreneurs.
  • Present and discuss the concept of financial projections and financial statements.
  • Identify the critical success factors and typical problems associated with financial plans.


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Unit Elements

How to set up a company in your country

National case studies on Entrepreneurship






Ent-teach- Entrepreneurship Teaching - project code 2011-1-NL1-LEO05-05202. This project has been funded with support from the European Commission through the Leonardo da Vinci - Lifelong Learning Programme. This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.