An Engineering Management Approach to Develop a Practical Capital Funding Model for Technology Start-up Open Access
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Capital funding models for start-ups are rare, yet they are needed to enable engineers to calculate their capital funding amount needed to complete their equity crowdfunding forms, loan application, or pursue other sources of funding. Funding decisions are frequently performed on an ad-hoc basis with minimal instructions, and with no clearly established methods. In this Praxis, I obtained and analyzed the financial data of fifteen technology start-ups and examined a proposed new practical model to estimate capital funding. The new model enables engineers to calculate their start-up capital funding and it was compared to the Allen’s model and to the Gruber’s model. This model identifies seven factors obtained from the financial statements to be used in the capital funding calculation: research and development, sales and marketing, general and administrative (income statement accounts) additional paid-in capital, accumulated deficit, accounts payable, and cash and cash equivalent (balance sheet accounts). This proposed practical capital funding model assists engineers and technologists in their process of obtaining capital funding by calculating the capital funding amount needed to complete various funding request forms and enables engineers to answer the question raised by investors and bankers, how much money are you asking.