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Navigating Capital Markets: Venture Capital, IPOs, and Underwriting Essentials

This guide delves into raising capital through venture capital, selling securities to the public, underwriting processes like IPOs, and debt issuance. Learn about evaluation techniques, capital budgeting, SEC regulations, and more.

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Navigating Capital Markets: Venture Capital, IPOs, and Underwriting Essentials

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  1. Ch. 15: Raising Capital • Only pages 419-33 • Venture Capital • Selling Securities to the Public • Underwriting • IPO Underpricing • Issuing Debt • Shelf Registration

  2. Venture Capital • First-stage, second-stage, mezzanine • Participation • Expense • Evaluation techniques • relate to capital budgeting • Exit

  3. Selling Securities to the Public • Board of Directors approves • Securities and Exchange Commission registration • Waiting period • Preliminary prospectus (red herring) • Effective date, price, final prospectus • Initial public offering (IPO) • Seasoned equity offering (SEO, secondary or follow-on offering)

  4. Underwriting • Firm commitment underwriting • Best efforts underwriting • Underwriter’s buy price, offer price, spread • Underwriter’s noncash compensation • Aftermarket • Green Shoe provision (overallotment) • Lockup agreements

  5. IPO Underpricing • Costs • 1990s, 1999 • Participation • Explanations

  6. Issuing Debt • Process for issuing public debt is similar to stock • But more than 50% of debt is issued privately • SEC permits registration of securities in advance and sale during a two-year period Shelf Registration

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