Philipp Wähler
PostDoctoral Researcher
Entrepreneurial Finance MiM 2025
Entrepreneurial Finance:
Introduction
Who am I?
• PhD from Warwick – Entrepreneurship & Innovation
• Core Expertise: Innovation (Knowledge Dissemination,
Experimental Research Designs) & Entrepreneurship
• Industry Experience: Siemens, Consulting in the
Netherlands
Why this module matters: A Look into Startup Finance
The Big Questions We’ll discuss in Entrepreneurial Finance
• Why do entrepreneurial ventures need finance?
• How do start-ups raise capital?
• Who invests in start-ups?
• What sources of inequalities exist in entrepreneurial finance and what strategies can
entrepreneurs use to mitigate those?
• How do I deliver a pitch?
• What are venture capitalists and how do they decide?
• How do ventures negotiate with investors?
What are your expectations from the module? ☺
What would you like to learn (about EntFin)?
Module Structure & What I am Expecting from You
Lectures
- Mix of theories, research, real-world examples, exercises & case studies
- Please ask questions
Seminars
• Interact!
• Cases, cases, cases
• Additional module material related to discussed content (videos and readings)
• Q&A sessions
Our Entrepreneurial Finance Journey (A Roadmap)
Today: Introduction to Entrepreneurial Finance
Day 2: Who invests in start-ups? Different Concepts
Day 3: Inequalities in Entrepreneurial Finance & Signaling
Day 4: Deal Valuation
Day 5: Deal Negotiation
Day 6: After the Deal: Growing Ventures
Day 7: Exits
Day 8: Alternative Investment Possibilities
Day 9: Wrapping-up and Group Presentations
What is Entrepreneurial Finance?
What is Entrepreneurship and how does Finance fit in?
Entrepreneurship according to Schumpeter (1934)
The entrepreneur is an individual who exploits a market opportunity through technical and/or
organizational innovation and through new combinations taking place in:
• Introduction of new products
• Introduction of new production methods
• New markets
• New forms of organization
Entrepreneurship is about identifying Opportunities …
• Climate Change
• Pandemics
• Political / International Changes
• Unemployment
• Financial Crises
→ Entrepreneurship can play a role in addressing these problems!
Needs
Legislation changes
AI
What is Entrepreneurship and how does Finance fit in?
Entrepreneurship according to Schumpeter (1934)
The entrepreneur is an individual who exploits a market opportunity through technical and/or
organizational innovation and through new combinations taking place in:
• Introduction of new products
But to exploit an opportunity, the
• Introduction of new production methods entrepreneur needs resources,
• New markets specifically MONEY!
• New forms of organization
So, what is Entrepreneurial Finance?
“The art and science of investing and financing entrepreneurial ventures”
Definition according to Alemany and Andreoli (2022)
Let’s kick-off our Entrepreneurial Finance Journey!
What do you think why ventures need
to raise finance?
Why do start-ups raise finance?
For instance, for reasons of Growth, Product
Development and Sustainability.
Think of ….
…Talent and Skill Acquisition
…Product Development (Prototype)
…Building Infrastructure (Manufacturing)
…Marketing and Sales
What kind of investment?
• Entrepreneurs’ Savings
• Gifts
• Bank Loan
• Government Grant
• Equity
What kind of investment?
• Entrepreneurs’ Savings
• Gifts
• Bank Loan
• Government Grant
• Equity Different forms of investments are associated
with pros/cons … but who invests into start-ups?
From Whom to raise Finance?
What finance possibilities can you think of?
From whom to raise finance?
• Friends & Family
• Crowdfunding
• Business Angels
• Government Funding Agencies
• Venture Capital
• Private Equity
From whom to raise finance?
• Friends & Family
• Crowdfunding
• Business Angels
• Government Funding Agencies
• Venture Capital
• Private Equity
These finance sources offer different advantages
and disadvantages which we will discuss at a
later stage of the module …
However, start-ups can get far without external finance – bootstrapping!
Bootstrapping as pre-market funding source
Obtaining small amounts of capital from the founders’ own sources, personal loans, or from
relatives
From Wharton Professor Ian MacMillan:
• Never buy new what can be bought second-hand
• Never buy what can be rented
• Never rent what can be borrowed
• Never borrow what can be begged
• Never beg what can be salvaged
… Nevertheless, most ventures need external finance
Lifecycle of a Venture and different Finance Sources
Milestone-based financing is key!
Seed Growth Start up Maturity
Different Stages & Different Needs of Financing
Seed
Growth
Startup
Maturity
Different Stages & Different Needs of Financing
Seed: We need funding until we sell to our first customers
Startup: We started selling a product, but we need financing to break-even
Growth: We reached break-even, but we need cash to further grow
Maturity: We make money now, we could need money for acquisitions
Different Stages & Different Needs of Financing
Seed: We need funding until we sell to our first customers
→ Likely source of funding: the entrepreneur (bootstrapping), 3F’s
Startup: We started selling a product, but we need financing to break-even
→Likely source of funding: Business Angels or Venture Capitalists
Growth: We reached break-even, but we need cash to further grow
→Likely source of funding: Bank (Loans), Venture Captialists, Corporate Strategic
Partnerships
Maturity: We make money now, we could need money for acquisitions
→Likely source of funding: IPO
An Example: The financing of Amazon.com
• Jul-94, founder personal funds ($10k)
• Jul,Nov-94, loans from founder ($44k)
• Feb-95, founder’s father ($100k)
• Jul-95, founder’s mother ($146k)
• Dec-95, 1 angel - director ($50k)
• Jan-96, angel syndicate (20 angels, $937k)
• May-96, founder’s brother & sister ($20k)
• May-96, founder’s father ($100k)
• Jun-96, venture capital (Kleiner Perkins, $8M)
• Jan,Feb-97, directors ($200k)
• IPO (3m shares, $49.1M) [Q2,97]
Source: Company SEC filings
Key Takeaways
What did you learn?
(My intended) Key Takeaways
• What is Entrepreneurial Finance
• Why do Ventures need Finance
• Introduction to Different Types of Financing
• Different Stages of Ventures & Different Needs for Financing
• Milestone-based Financing ….
Up Next….
Seminar: General Introduction, Group Sessions
Who invests in Ventures?
What is the Business of Venture Capital?
Assessment for the Module
Group Presentation (30%)
- Investor pitch for entrepreneurial venture
- 10 min presentation
- Please submit your slides prior the the day of the presentation
(before the workshop lecture, please)
Individual Assignment (70%)
- Financing plan for an entrepreneurial idea (You can find the question on my.wbs)
- 2,500 words max
AI in the assignments … use it carefully
AI in the assignments: what I don’t want to read
Instead … use AI to
• To gather ideas (but do your own research!)
• To identify weaknesses in the structure
• Identify grammar/spelling mistakes
• Get feedback on your thoughts
• Plagiarism detection
Please indicate how you use it – transparency is key! ☺
