Entrepreneurial Finance: Entrepreneurship and Finance
Entrepreneurial Finance
Lesson 1: Entrepreneurship and Finance
Instructor: Tommaso Saltini
Dates: February 23rd and 25th, 2026
Institution: ALTIS, ALTA SCUOLA IMPRESA E SOCIETA, Università Cattolica del Sacro Cuore
Definition of Entrepreneurship
Entrepreneurship is defined as the exploitation of entrepreneurial opportunities including:
Developing a business plan
Hiring the human resources
Acquiring financial and material resources
Process: Entrepreneurship is the process of designing, launching, and running a new business. It involves setting up a business or businesses, taking on financial risks in the hope of profit.
Rules of Brainstorming in Entrepreneurship
To stimulate creativity in coming up with business ideas, consider the following rules:
Generate numerous ideas; having many is key to finding a brilliant one.
Build on others’ ideas by improving and customizing them.
Employ visual thinking: sketch ideas and write down thoughts.
Engage in brainstorming sessions with friends and partners.
Test ideas against market needs; the best idea may not align with market demand.
Important: after brainstorming and thinking, it is essential to take action and start.
Transitioning from Idea to Model
Business Model: Move your business idea into a business model and define the model before developing a business plan.
For existing businesses: Improve your existing strategy.
For start-ups: Design a new strategy.
Business Model vs. Business Plan
Business Model:
Description: It explains the rationale of how an organization creates, delivers, and captures value.
Business Plan:
Description: A document providing detailed forecasting and information (both narrative and numerical) about a business aimed at launching or improving.
Characteristics of Business Models and Plans
Business Model and Business Plan must highlight the essential traits of your business idea, enhancing coherence and detailing future impacts and results.
Internal stakeholders: The entrepreneur, investors, and stakeholders.
Methodology: Start with an analysis of the stakeholders before moving to utilize the model.
The Essentials of a Business Model
Creating Value: Identify what needs your business addresses.
Delivering Value: Define how to reach the target market.
Capturing Value: Determine what portion of the value generated is retained by the organization.
The Business Model Lifecycle
Key phases in the business model lifecycle include:
Designing
Implementing
Refining
Adapting / Changing
Business Model Canvas
The Business Model Canvas is a visual tool used to depict all building blocks involved in starting a business, such as:
Customers
Route to market
Value proposition
Financial structure
Strategic management template: It serves to develop or document existing business models, illustrating potential trade-offs and aligning activities within the organization.
Applicability: Suitable for all types of businesses:
For-profit or not-for-profit
Commercial or Social
Multinational or Small business
Established or Start-up
Canvas Elements and Implications
Elements of the Business Model Canvas include:
Partners
Activities
Resources
Customer segments
Channels
Customer relationships
Value proposition
Cost Structure and Revenue Streams: Understand the financial implications, including costs vs. revenue generation, and aim to create symmetry within the canvas strategies.
Business Plan Structure
Purpose of Business Plan:
Outlines overall strategy and direction of the business.
Provides detailed financial forecasting and comprehensive market assumptions about future functionalities.
Focused on a three to five year outlook.
Nature of Business Plans
Business plans are dynamic tools that must refresh to remain relevant, akin to budget-to-actual analyses.
Two primary purposes:
Internal: Serves as a management tool for aligning company direction and decisions.
External: A means to secure financing through debt and equity options.
Start-Up and Growth Requirements
To be an entrepreneur involves:
Start-up: Initiating a business endeavor.
Growth: Fast-paced expansion towards financial sustainability.
Essential needs: A robust business model and access to capital.
Understanding Capital Needs
One of the key challenges for entrepreneurs is accurately assessing their capital needs:
Determining how much capital is required and the appropriate timing for raising it.
Various funding options are available to support growth in modern entrepreneurial environments.
The right partnerships with investors can affect business trajectories.
Definition of Entrepreneurial Finance
Entrepreneurial Finance: Defined as the acquisition and utilization of capital along with decisions regarding the appropriate size of capital for new and growing ventures:
How much money to raise, when, who to engage, and the types of instruments to use.
Financial Instruments and Institutions
For raising capital, awareness of:
Financial Instruments: Debt and Equity.
Financial Institutions/Investors: Commercial banks, equity funds, business angels, crowdfunding platforms.
Key documents to prepare include:
Financial Tools: Business Plan (comprises income statements, balance sheets, cash flow statements, along with strategic narrative information).
Valuation Analysis and Presentation materials.
Capital Needs Vary by Firm Life Stage
Funding options are contingent upon the firm’s life stage, with companies typically evolving from birth to maturity, and leading to eventual decline or transformation.
Variety of Capital Providers
Types of Funding Sources:
Private Equity, Venture Capital Funds, Venture Philanthropy, Incubators, Accelerators, Business Angels, Grants, Soft Loans, Crowdfunding.
Stakeholders include founders, friends and family, impact capital funds, public investors, and numerous lending institutions.
Variance in Capital Needs
Capital requirements are heterogeneous and vary based on:
Geographic Location
Industry Type (traditional vs. high tech)
Venture Development Stage
Character of the funding group (individuals, families, teams).
Early-stage ventures may require smaller amounts, while high-tech scalable business models often necessitate larger capital injections.
Addressing the Angel Capital Gap
The true limitation in entrepreneurship is not the absence of money but the lack of innovative ideas and committed individuals willing to engage their resources.
Despite existing financial gaps, there are ample angel funding opportunities available for committed entrepreneurs.
Challenges Affecting Start-ups and SMEs
Constraints to accessing finance include:
Weak legislation and policies impacting the entrepreneurial environment.
Lack of educational programs fostering entrepreneurial skills and confidence.
Demand-side factors, including lack of transparent histories and collateral.
Supply-side factors: investors often lack structure and experience.
Overcoming Financial Resource Challenges
Entrepreneurs need to demonstrate:
Strong commitment and capacity to take risks.
Innovation and creativity.
Awareness of their capital needs, including amount required and duration.
Familiarity with financial instruments and investor profiles.
The environment must facilitate cooperation among various stakeholders including government bodies, investors, NGOs, and development agencies.
Engaging with Investors
Recommendations for approaching investors include:
Formulate a compelling business model focused on impact.
Prepare a practical business plan.
Express passion and commitment to the enterprise.
Engage in marketing and promotional efforts.
Be willing to share knowledge, data, and results with investors.
Show openness to collaboration and demonstrate sustainability and scalability.
Recommended Readings
Textbook:
Hans Landström, (2017), Advanced Introduction to Entrepreneurial Finance, Edward Elgar Publishing, Cheltenham, UK.