Business Plan: Aqua Diving Inc. - Part 13

• Aqua Diving Inc. Expansion Plan
• Venture Capital Funding

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Aqua Diving Inc. Expansion Plan

This table above gices the complete roll out plan for Aqua Diving Inc. over a period of 7 years factoring about an year for prelaunch preparation and setting in place for the first resort in upcountry New York locations.

By no means this plan is either conservative – it is actually a very aggressive plan but it suits the promoters’ temperment and is ideal. This kind of aggressive growth in a fairly lucrative industry is what would attract the investors to put in their money. Convincing investors should not be an issue with this kind of growth plans.

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Venture Capital Funding

Business firms need finance mainly for two purposes – to find the long-term decisions and for meeting the working capital requirements. The long-term decisions of a firm involve setting up of the firm, expansion, diversification, modernization and other similar capital expenditure decisions. All these decisions involve huge investment, the benefits of which will be seen only in the long-term and these decisions are also irreversible in nature. Whenever a business firm plans to invest in a long-term project, it needs to assess the benefits that can be reaped out from that particular long-term investment and come to a conclusion whether that particular investment is profitable for the business or not.

Capital can be of various forms, say own capital, debt finance, equity partner being sought, venture capital etc. Venture Capital is a form of equity capital usually sought by fast growing private enteritis. The need for finance may vary from one organization to another as such some companies may need funds to start the company; some may need it for renovation or reinvestment purposes and various other similar needs. Firms that are into Venture Capital business usually make wise investment and they generally focus on a limited sector specialization like IT Infrastructure, Life Sciences etc (IVCA - Indian Venture Capital Association, 2007).

Studies on East Germany and Eastern Europe (The nianatzement of transf()rniati()n ill hast Cjerman tirms, 1996) reveal that the amount of capital required for the innovation of products and processes are typically surpass the funds that are with the firm and also the debt-financing capabilities that the firm has (Do Foreign and Domestic Venture Capital Firms Differ in their Monitoring of Investees, 2003). Venture capital organizations normally source most parts of their funding from large institutions, typically investment firms, like for instance fund of funds, financial institutions, and banks etc. These entities normally invest in a venture capital fund for a duration of 10 years approximately.

Venture capital firms necessitate entrepreneurs to report to them frequently thereby offering high amount of verbal opinions. Although it can be stated that entrepreneurs receiving capital from private investors would be comfortable with such frequent feedbacks and less reporting requirements, research reveals that these entrepreneurs aspire for greater involvement from their private investors particularly when it comes to the issue of financial expertise. Policy makers and financial practitioners in the recent past have strongly articulated their concern in the allocation of meticulously assessed findings on the accessibility and practicability/value of substitute policy involvements for Venture capital in order to encourage the origin and growth of highly prospective SMEs (Europa - Summaries of EU Legislations, 2010).

The most popular policies are frameworks for venture capital as set by policy makers is that there is wide scope for creation of a highly integrated financial market in order to ease the venture capital initiatives (Europa - Summaries of EU Legislations, 2010). In addition to the above, there are also plans for making the existing framework for venture capital more stringent by reviewing all the existing policies and framing new set of policies. Reduction of obstacles in taxing is also a recent initiative in this industry.

If for instance, a particular entrepreneur is willing to obtain finance through venture capital, it is extremely crucial that the entrepreneur involves himself with professional organizations thereby developing a strong network. This network will further help the entrepreneur to get into contact with private investors which is also very important.