Invention_Funding

Running Head: Funding Funding Introduction to Business Written by Michael Diaz A.I.U. November 21, 2010 Funding 1 Abstract An investment banker is a representative of a bank or financial firm who’s job is to raise capital for corporations, boroughs, communities, cities, towns and districts to name a few. Some of the responsibilities of an investment banker are to organize and negotiate large financial transactions. They also take on the role of advisor to company clients as well as introduce beneficial financial ventures for their own firm. What a company goes public, an investment banker will also assist in creating the value for an I.P.O., initial public offering. The purpose of the stock market is to give firms a public forum where they can sell off portions of their company to raise capital. The portions of the company being sold are called stocks. These stocks give the shareholders a minority ownership in the company. Although the stockholders are considered part owners of a company, they do not have the decision making powers on everyday items. The capital raised by the company can be used to promote, enhance or expand the business or product line. Financial management consists of several factors. Long term investments are one of the facets of financial management. Long term investments are contributions that will not fulfill their financial expectations for 10 or more years. Additional elements of financial management identifying, assessing and prioritizing of risk though risk management. Other attributes of financial management are obtaining funds and daily financial activities. Funding 2 There are several components to risk financing. One way is to purchase insurance or by issuing debt, that is referred to as risk transferring. Risk pooling is another element which entails the grouping the risk of a single investment with a larger investment with similar uncertainty. The appropriate funding for a new or enhanced technology for someone with limited finances and managerial skills may be to sell stock in the company. This could be a beneficial way of raising the necessary capital for a start up. This provides the company the ability to raise capital without incurring debt. Although, this seems too good to be true, you aren’t getting funding without giving up something. By selling stock, you give up a piece of ownership to stockholders. The advantage is the owner can decide how much control they are willing to give up or base the amount to sell on the needs of the company only. If the product is unique, a patent should be applied for as a form of insurance. This will allow the company to license the product once it has been proven and established. This is a very useful benefit in a saturated market. Licensing may also positively affect the company stock price because the product’s value will be increased by licensing. The company will have the right to charge licensing fees to other companies with similar product that wish to use their design. This can generate additional capital to expand or enhance. Funding 3 Reference Bellis, M. (n.d.). Turning an invention idea into money. Retrieved from http://inventors.about.com/od/licensingmarketing/a/license Kennon, J. (n.d.). An introduction to the stock market. Retrieved from http://beginnersinvest.about.com/cs/investinglessons/a/aaless1intro Business dictionary. (n.d.). Retrieved from www.businessdictionary.com/definition/saturated-market.html Casparie, J. (2007, June 12). What exactly is an investment banker' Retrieved from http://www.entrepreneur.com/money/financing/raisingmoneycoachjimcasparie/article179958.html Cunningham, L. (2007). Securitizing audit failure risk: an alternative to damages caps. William & Mary Law Review