Week 8 Reading Reflection

  1) What was the biggest surprise for you in the reading? In other words, what did you read that stood out the most as different from your expectations? 

I was surprised to learn about social lending and crowdfunding. I had no idea that these ideas were part of a 21^st century phenomenon. I definitely see the need for entrepreneurs to seek this type of funding because commercial lenders don’t want to bear the risk of a new entrepreneur. I just didn’t know the definition of a social lender, where it is based (the internet), and how entrepreneurs found this new phenomenon as a source of capital.

2) Identify at least one part of the reading that was confusing to you.

I was confused about the whole idea of an “angel;”. The book went into great detail explaining the different types of angels and their motives to invest in an entrepreneur, but I just still don’t really understand what they are and why they care to invest. I am picturing something like the show “Shark Tank”, but I wish the terms and explanations were a little bit simpler so I could understand easier.

3) If you were able to ask two questions to the author, what would you ask? Why?

I would ask the author what the benefits of raising capital through a private placement vs preferred stock because in one of my other classes I learned that preferred stock was often used in venture capital. I would also ask the author in his/her opinion, is an IPO the best exit strategy for a venture capital firm?

4) Was there anything you think the author was wrong about? Where do you disagree with what she or he said? How?

I disagree with the author in the myths about venture capitalists section. While I do believe the number one myth is true in some regards, I think the blanket statement cannot be thrown on the good intentions of venture capitalists and therefore dispel the myth. I believe the original idea of a venture capitalist was to influence and help out the starting entrepreneur with funds, but with money there is greed and a want for power. I just don’t think the author has enough evidence to assert that all venture capitalists do not want to control the company. Maybe that isn’t their initial intention, but I think it happens more frequently than not.