Learning objective


Find also specific information for micro companies under "Related Resources"

Strategy and strategy map: A strategy means selecting a set of activities in which an organization will excel to create a sustained difference in the market place. The strategy map is akin to a macro view of the strategies followed by the organization. Strategy maps are a way of providing a macro view of an organization's strategy, and provide it with a language in which they can describe their strategy, prior to constructing metrics to evaluate performance against their strategies. (Source: www.projectmanagementsource.com/strategy/index.html) After reading the component you will have an idea of what kind of finance is available in order to develop an innovative idea. The component describes the most important sources of finance and remarks on the importance of analysing the stage of the innovation in order to know what kind of financing is most suitable according to the stage and scope of the innovation. It will take about 50 minutes to go through this component.

Introduction

Developing an innovative idea into a product, technology or even a new company is very time and money consuming. An important problem in the managing of innovation is finding the right way of financing it.
Banks may provide loans. Venture capital, also known as risk capital or private equity investment, normally seeks to provide capital through the purchase of shares in the company.
As a rule, a large corporation with an innovative project would be most likely to look to a bank for financing that project. An alternative, for a listed company, i.e., one whose shares are quoted on a Stock Exchange, might be to raise extra capital by issueing new shares. 1
Another way to finance innovation is by means of strategic alliances 2 where the companies involved share knowledge, skills and resources as well as expenses.



1 This paragraph is taken from Gate2Growth. A guide to financing innovation. European communities 2002
2 For more information about Strategic Alliances please have a look to component 11.5 of this guide.

 

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