Student's name :

Ngottie Link
ENCO1
ID 31221020350
Wedmorning
- -

Q1 :
Why is seed financing veryrisky ?
B seed considered as the riskiest
financing is
stage because during this stage there is not ,

actual product no sales 2 the Failure rate is extremelyhigh due to the uncertain
yet any
nature Of R2D process in the development stage
-the PEIs Follow the 100/10/1 rule z to protect themselves from the risk arise

-
They screen 100 projects , Finance 10 of them in hope that I will be successful
-Because the seed
financing is so
riskly =
theyhave to invest in > I project

accept the fact that butFace losses the others

2
they may find a
winning project on

Q2 A characteristic OF renture capital ?

:

B Venture capital can be

define as the Funding for the
First 3 stages of thelife
cycle
-
all of these 3
stages have high risk
highest risk
development uncertainty OF R 2 D activity e its
Feasibility no market demand 2 Revenue

-searly stages start-up more

money is invested but
still not certain about Future development

early growth more

money is invested but
still not certain about
Future development

=> Therefore the ,

investment of Venture capitalists is characterized by a high level of risk

Q3 :
Why would a
company
choose PE over
mortgage I do an I
C

·
Renefits of having PE instead of
mortgage / toan
-Besides money provisions , PEcan support the company

3
artification
-
the U
benefits network which to an providers (bank ,
trade creditors, ....

knowledge does not Offer

Financial
·
Risk-tolerance

-
For companies in the
early stages -
the risk is extremely high as there is no revenue , cash

Flow fixed assets to collateral the

or even serve as for
financing
-companies would Find it
difficult to obtain funding from lans , mortgages
 ·
The relationship : VBCs 2 PEIS

-Because the
Firm cannot use other
financing sourcesa they can exploit the benefits if
they turn to the PEIs = they accept investment from PEIs

-IEIs invest cash for New shares

gain partial ownership 2 influence
2

-Because PEIs obtain the

manage company growth they can
better co-operate
right to ,

guide the company, ensure that all resources are

efficiently utilizedz maximize
the outcomes.

Qu Share price of PE compare to that of

. public company a

C -
Public :
equity pricing is driven by market Fluctuations (demand, supply (
-Private based
equity pricing is
: on
negotiations process
=
cannot determine the specific rule comparison between them
,

Q5
:
Why is managerial involvement very low in seed
Financing ?
-seed
financing < stage during this stage the company
For development , ,

only focus on
developing the ideal there is no operation as the project has just begun
-most activities in this stage involve much
: RCD no need For PEIs to

-de to the high risk nature of this phase I seed investors

usually hold only a

minority stalle (invest limited amount of

money) I they may not have the authority ,

or incentive to be
deeply involved. Hands-off approach
-

they only act as passive supporters, providing guidance when needed

QG :
Classify the clusters of invesments
-
there are I
ways to classify the clusters of investment :

1) Traditional Firm's developmentllige cycle stages)

-based on the relationship Financial needs in each stage

>
-
there are G clusters

·
seed
financing : For development stage
Fund business idea ,
R2D activities=> to create new venture

Start-up Financing
·
: For start-up stage
Fund the establishment of the company, purchase assets
to start operating
 ·

Early-stage Financing For

early growth stage
provide FundsFor company that has started
generating
sales but need addition at capital to scale operation boost ,

growth 2 sale sustainthe

gap (CFC needed
=
money

·
Expansion Financing- For Expansion Stage
funds are used to
buy more
fixed assets , either through
internal or external growth Further
to scale Firm M

.
Replacement Financing For mature
age stage
As product & market start to be statured, limited growth
ability replace / restructure the
, company now
company
shareholder composition, investment
strategy

Vulture For crisis/decline

·

Financing stage
Funds to restructure
, support firms inFinancial distress.

2) Modern approach
>
-
based on Firm's needs 2 PEI's segment
>
-
There are 3 clusters
Creation products
·

Financing :
focus on
supporting new ventures , ,
service or

renewing an
existing production process
·
Expansion Financing :
support the growth of the firmI expand ,
I size , I market
Share
-in-house growth
Paths external growth
~ vertical/horizontal integration
·

Change Financing : to
change Firm's shareholder composition operational
structure
2

IPO

Through M2 A
 Q
7. What would
you
do to develop PEVC market in VN (2025 -

2030)

1 Enhance
regulatory Framework
Vietnam hasn't established activities and
Uptill now ,
any specific sandbox for PEVC ,

the
regulations are still not adequate to protect investors from significant risks arise

in PE/VC investment
.
engaging
From
the more trust the investors would have
-
The more
stringent the
regulatory Framework , .

Therefore ,
I think that more
specific laws upon IPO ,
M2 A , ... For PEVC activities
that the PEIs
should be established to ensure can exit easily
2 their interest
is not
neglected , unprotected .

2 Establishment of eco system

-More incubators , support programs should be established to ensure

a
pipeline of investment-ready companies ↓ sudden death
2 to risk

3
Market
transparency
User
Friendly platforms be created tocan share information about the start-ups ,

global market trends, opportunities

-Make sure that information disclosed is realiable 2 can be in multiple languages
to make it more accessible for international investors.