*** please don't use handwriting use your keyboard..

**** please don't copy and paste, I need unique and new answer thank you****

MGT 402

Answer the following question:

1. Experts say that entrepreneurs who need between $100,000 and $3 million often face the greatest obstacles when raising capital for their businesses. Why? (1.5 marks)

2. How should Kevin Semcken raise the $1.5 million in capital that Able Planet needs? Be sure to consider sources of both debt and equity financing. (1.5 marks)

3. Write a short memo to Kevin Semcken explaining what he should do before he approaches potential lenders and investors to maximize his chances of getting the capital that Able Planet needs. (2 marks)

The Answer must follow the outline points below:

• Each answer should be within 200 to 500 range of word counts.

Venture capitalist Kevin Semcken discovered Able Planet, including Costco and Walmart, demanded. The credit line a small startup in Wheat Ridge, Colorado, that produces head- restriction came at the worst possible time. Able Planet was phones with an imbedded magnetic coil to enhance sound quality, gearing up for the late-spring graduation season, its second at a technology conference in Denver, Colorado. Semcken, who biggest sales period of the year after Christmas. The company suffers from a hearing loss in one ear, was intrigued and tested normally cranked up production for the crucial back-to-school the small company's product by listening to Dean Martin's You're and Christmas seasons which account for 60 percent of its Nobody "Til Somebody Loves You." "I was instantly a fan," he sales) during the summer, but the bank's new restrictions on its says. Semcken invested in Able Planet and soon became the com- line of credit put its most lucrative sales seasons in jeopardy. pany's CEO and chairman. Two years later, the company's unique Semcken met with Able Planet's two board members, Rob noise-cancelling Linx headphones won an award for innovation at Cascella and Steve Parker, both of whom are investors in the the Consumer Electronics Show, and orders began pouring in. In no company. They advised him to put the Sound Fit earphones on time, the company's annual revenue reached $2 million. hold for the time being and to focus on increasing sales of Linx Semcken was pleased with Able Planet's progress, but he headphones. Without a way to finance production of the head- had a bigger vision for the company. Inspired by stents, balloon- phones, however, Semcken knew that opening new retail like devices used in medical procedures to clear blocked arteries, accounts and increasing production would be impossible. He Semcken came up with the idea of earphones that incorporated an needed $1.5 million to finance current operations for Linx, inflatable disk that could conform perfectly to the size and shape build the Sound Fit prototypes, and market both products to of a person's ear canal. The result would be a set of earphones that new and existing customers. Semcken traveled around the fit snugly into the ear canal, stay in place even during strenuous country to call on 15 different banks, but none of them was activity, and block out ambient noise. He even had a great name interested in making a loan. A crisis in the financial markets for the product: Sound Fit. Semcken saw the potential for Sound had all but slammed shut the lending window at most commer- Fit not only to improve substantially the performance of ear-cial banks. Semcken pondered his options. phones, but also to revolutionize the design of other products, such as Bluetooth headsets and hearing aids. He had lined up 30 potential customers who were interested in learning more about the innovative earphones and had convinced them to sign non- disclosure agreements. What Semcken needed now was financing so that Able Planet could manufacture production-quality proto- types of the Sound Fit earphones and generate orders. Then Able Planet's banker called with bad news. The bank was changing the terms of Able Planet's $2.5 million line of credit. Under the new terms, the bank would no longer finance the upfront cost of raw materials and manufacturing. Semcken was stunned because even though Able Planet was not yet cash flow positive, the company had always made its payments to the bank on time for the last 3 years. Without a flexible line of credit, Able Planet would not be able to purchase the materials and manufacture the headphones that its retail customers