Funding Decisions and Raising Capital

Facilitation plan

Begin by naming the four outcomes. For each lesson, model the fictional decision, reveal the method one step at a time, invite an individual attempt, and discuss why the distractors fail. Allow a fresh attempt after feedback. Reserve the final three scenarios for independent practice.

1. Opening and prior knowledge: 5 minutes.
2. Four guided lessons: about 5–7 minutes each, plus discussion.
3. Final check and targeted remediation: 10–15 minutes.
4. Transfer prompt: ask how the method changes with the learner’s industry facts.

Use the text-first study guide as the accessible alternate format. No recorded or live delivery is assumed.

State the use of funds

Outcome: Separate purchase price from the working cash needed to execute a plan.

Demonstrate

A distributor needs $60k for inventory, $20k for equipment and $15k for seasonal payroll timing: $95k before contingency. The founder checks quotes and cash receipts before choosing a funding amount.

1. List each use with a quote and date.
2. Model receipts against payment dates.
3. Size a realistic reserve and test a downside case.

Ask and observe

$60k inventory, $20k equipment and $15k payroll timing total what amount before reserve?

Expected choice: $95k. $60k + $20k + $15k = $95k; reserve is a separate assumption.

If missed: Explain the calculation or decision aloud; then present “A plan needs $40k stock and $10k systems before reserve. Base uses?” Correct choice: $50k.

Discussion prompt: Explain why purchase funding alone may not pay next month's bills. Invite a brief verbal explanation. The learner view uses selectable checks and requires no typed submission.

Observe: Can the learner state the decision, identify the relevant facts, and follow the method without cues? A correct guess is not yet evidence of transfer. If a learner misses twice, return to the worked example with new numbers or facts before another attempt.

Compare debt and equity

Outcome: Identify cash repayment and ownership dilution as separate tradeoffs.

Demonstrate

At a $900k pre-money valuation, a $100k new equity investment implies $1m post-money and 10% ownership for that investor, assuming no other terms or dilution. A $100k loan avoids that immediate equity issuance but adds repayments and lender terms.

1. Model debt payments under a low-sales case.
2. Calculate ownership from actual pre- and post-money definitions.
3. Compare control, total cost, timing, and flexibility.

Ask and observe

$900k pre-money plus $100k new equity implies what investor share, ignoring other terms?

Expected choice: 10%. Post-money is $1m; $100k ÷ $1m = 10%.

If missed: Explain the calculation or decision aloud; then present “$800k pre-money plus $200k new equity implies what share?” Correct choice: 20%.

Discussion prompt: Choose the risk question for a founder with volatile monthly cash. Invite a brief verbal explanation. The learner view uses selectable checks and requires no typed submission.

Observe: Can the learner state the decision, identify the relevant facts, and follow the method without cues? A correct guess is not yet evidence of transfer. If a learner misses twice, return to the worked example with new numbers or facts before another attempt.

Recognize securities rules

Outcome: Flag an investor offer for legal review before public promotion.

Demonstrate

The founder drafts a public post: ‘Invest $10k for 2% of our company.’ Before publishing, counsel evaluates the proposed security, offering exemption, investor eligibility, disclosures, and state requirements.

1. Identify whether the proposal gives an investment interest.
2. Review the contemplated exemption and solicitation restrictions.
3. Obtain securities counsel review before outreach or funds.

Ask and observe

Which proposed post needs securities counsel review before publishing?

Expected choice: Invest $10k for equity in our company. Inviting money for ownership can be a securities offer with federal and state requirements.

If missed: Explain the calculation or decision aloud; then present “A founder advertises ‘own a share for $500.’ What should happen first?” Correct choice: Review the applicable offering pathway with counsel.

Discussion prompt: Distinguish a chocolate product promotion from an investment solicitation. Invite a brief verbal explanation. The learner view uses selectable checks and requires no typed submission.

Observe: Can the learner state the decision, identify the relevant facts, and follow the method without cues? A correct guess is not yet evidence of transfer. If a learner misses twice, return to the worked example with new numbers or facts before another attempt.

Protect runway and reporting

Outcome: Tie funding milestones to cash forecast and investor or lender obligations.

Demonstrate

A company holds $120k unrestricted cash and projects $20k net cash use per month. Simple runway is six months if that burn stays constant; a later $45k inventory payment shortens the real dated runway.

1. Forecast cash by week with actual due dates.
2. Read covenants and reporting requirements.
3. Reforecast after material changes and communicate deviations.

Ask and observe

$120k cash and steady $20k monthly net use imply how many months of simple runway?

Expected choice: 6. $120k ÷ $20k = six months under the stated flat-burn assumption.

If missed: Explain the calculation or decision aloud; then present “$90k cash and $15k monthly use imply simple runway?” Correct choice: 6 months.

Discussion prompt: Identify the reason a simple monthly average can mislead. Invite a brief verbal explanation. The learner view uses selectable checks and requires no typed submission.

Observe: Can the learner state the decision, identify the relevant facts, and follow the method without cues? A correct guess is not yet evidence of transfer. If a learner misses twice, return to the worked example with new numbers or facts before another attempt.