To Invest or not to Invest: The Start-Up Investment Decision-Making Process

Corina SERBAN (patrintas) (), Cristian Negrutiu () and Andreea-Nicoleta Bichel ()
Additional contact information
Corina SERBAN (patrintas): Bucharest University of Economic Studies, Bucharest, Romania
Cristian Negrutiu: Bucharest University of Economic Studies, Bucharest, Romania
Andreea-Nicoleta Bichel: Bucharest University of Economic Studies, Bucharest, Romania

Management and Economics Review, 2023, vol. 8, issue 2, 170-179

Abstract: This article discusses the five stages involved in securing financing for a start-up business. The first stage involves market analysis to determine the potential for development, including estimation of the addressable market, analysis of the competitive environment using tools like the Five-Forces Model, and identification of the ideal customer and/or consumer. The second section focuses on the business model, which involves determining whether the product is technological or service-based, and conducting a product description, numerical estimation, and definition of the technological dimension. The third section outlines the growth strategy, including identifying competitive advantages and developing a roadmap with the main commercial and technical characteristics to be developed in the future. The fourth stage involves determining the amount of investment required and how the funds will be used. The evaluation of the start-up is a crucial step in this process. The article identifies two fundamental principles for evaluation, namely, that the earlier the start-up, the less sophisticated the evaluation methods, and that since start-ups are not listed on the stock exchange, evaluation is eminently subjective and a continual negotiation process. The final stage involves auditing the existing situation to determine whether the company presents legal or financial risks and whether financing can take place or not.

Keywords: competitive advantages; Five-Forces Model; growth strategy; investment; risks. (search for similar items in EconPapers)
JEL-codes: D25 D70 D81 M13 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://mer.ase.ro/files/2023-2/8-2-4.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rom:merase:v:8:y:2023:i:2:p:170-179

Access Statistics for this article

Management and Economics Review is currently edited by Ciocoiu Nadia Carmen

More articles in Management and Economics Review from Faculty of Management, Academy of Economic Studies, Bucharest, Romania Contact information at EDIRC.
Bibliographic data for series maintained by Ciocoiu Nadia Carmen ().