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53 Pages

Kap9primerentrepreneuruka

Course: ECON 101, Spring 2011
School: FIU
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Word Count: 4688

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Strategy AprimerinEntrepreneurship Prof.Dr.UlrichKaiser Institutefor and BusinessEconomics Universityof Zurich Springsemester 2008 Chapter9:BuildingaNewVentureTeam TableofContents I. CreatingaNewVentureTeam A.TheFounderorFounders B.RecruitingandSelectingKeyEmployees C.TheRoleoftheBoardofDirectors II. RoundingOuttheTeam TheRoleofProfessionalAdvisors A.BoardofAdvisors B.LendersandInvestors...

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Strategy AprimerinEntrepreneurship Prof.Dr.UlrichKaiser Institutefor and BusinessEconomics Universityof Zurich Springsemester 2008 Chapter9:BuildingaNewVentureTeam TableofContents I. CreatingaNewVentureTeam A.TheFounderorFounders B.RecruitingandSelectingKeyEmployees C.TheRoleoftheBoardofDirectors II. RoundingOuttheTeam TheRoleofProfessionalAdvisors A.BoardofAdvisors B.LendersandInvestors C.OtherProfessionals Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 2 I. CreatingaNewVentureTeam 1. Anewventureteamisthegroupoffounders,keyemployees,andadvisers thatmoveanewventurefromanideatoafullyfunctioningfirm. 2. Usuallytheteamdoesntcometogetherallatonce.Instead,itisbuiltas thenewfirmcanaffordtohireadditionalpersonnel. 3. Theteamalsoinvolvesmorethanpaidemployees.Manyfirmshave boardsofdirectors,boardsofadvisers,andprofessionalsonwhomthey relyfordirectionandadvice. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 3 I. CreatingaNewVentureTeam LiabilitiesofNewness 1. Newventureshaveahighpropensitytofail. 2. Thehighfailurerateisdueinparttowhatresearcherscalltheliabilityof newness,whichreferstothefactthatcompaniesoftenfalterbecause thepeoplewhostartthefirmscantadjustquicklyenoughtotheirnew rolesandbecausethefirmlacksatrackrecordwithoutsidebuyersand sellers. 3. Assemblingatalentedandexperiencednewventureteamisonepath thatfirmscantaketoovercometheselimitations. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 4 I. CreatingaNewVentureTeam ElementsofaNewVentureTeam Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 5 I. CreatingaNewVentureTeam A.TheFounderorFounders 1. SizeofFoundingTeam a. Thefirstdecisionthatmostfoundersfaceiswhethertostartafirmontheir ownorwhethertobuildaninitialfoundingteam.Studiesshowthatteams orpartnersstart50to70percentofallnewfirms(CH:47percent). b. Itisgenerallybelievedthatnewventuresstartedbyateamhavean advantageoverthosestartedbyanindividual,becauseateambringsmore talent,resources,ideas,andprofessionalcontactstoanewventurethan doesasoleentrepreneur. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 6 I. CreatingaNewVentureTeam A.TheFounderorFounders c. Severalfactorsaffectthevalueofateamthatisstartinganewfirm. i. First,teamsthathaveworkedtogetherbefore,asopposedto teamsthatareworkingtogetherforthefirsttime,havean edge. ii. Second,ifthemembersoftheteamareheterogeneous, meaningthattheyarediverseintermsoftheirabilitiesand experiences,ratherthanhomogeneous,meaningthattheir areasofexpertiseareverysimilartooneanother,theyare likelytohavedifferentpointsofviewaboutimportantissues. Thesedifferentpointsofviewarelikelytogeneratedebateand constructiveconflict. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 7 I. CreatingaNewVentureTeam A.TheFounderorFounders 2. QualitiesoftheFounders a. Onereasonthefoundersaresoimportantisthatintheearly daysofthefirm,theirknowledge,skills,andexperiencesare themostvaluableresourcethefirmhas. b. Severalfeaturesarethoughttobesignificanttoafounders success.Thesefactorsinclude: Thelevelofthefounderseducation Priorentrepreneurialexperience Relevantindustryexperience Networking(thedepthofthefoundersprofessionalnetwork) Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 8 I. CreatingaNewVentureTeam A.TheFounderorFounders 2. QualitiesoftheFounders Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 9 I. CreatingaNewVentureTeam A.TheFounderorFounders 2. QualitiesoftheFounders Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 10 I. CreatingaNewVentureTeam B.RecruitingandSelectingKeyEmployees 1. Foundersdifferintermsofhowtheyapproachthetaskofrecruitingand selectingkeyemployees.Somefoundersdrawontheirnetworkof contactstoidentifycandidatesforkeypositions,whileothersuse executivesearchfirms. 2. Anexecutivesearchfirmisacompanythatspecializesinhelpingother companiesrecruitandselectkeypersonnel. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 11 I. CreatingaNewVentureTeam B.RecruitingandSelectingKeyEmployees 3. Manyfoundersworryabouthiringthewrongpersonforakeyrole. Becausemostnewfirmsarestrappedforcash,everyteammember mustmakeavaluablecontribution,soitsnotgoodenoughtohire someonewhoiswellintendedbutwhodoesntpreciselyfitthejob. 4. Somefoundersapproachthetaskofhiringbycreatingaformalhiring plan.Othersapproachthetaskmoreinformally,andhirepersonnelas fundsbecomeavailableandopportunitiesemerge. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 12 I. CreatingaNewVentureTeam C.TheRoleoftheBoardofDirectors 1. Ifanewventureorganizesasacorporation,itislegallyrequiredtohaveaboardof directors apanelofindividualswhoareelectedbyacorporationsshareholders tooverseethemanagementofthefirm. 2. Aboardistypicallymadeupofbothinsideandoutsidedirectors.Aninside directorisapersonwhoisalsoanofficerofthefirm.Anoutsidedirectoris someonewhoisnotemployedbythefirm. 3. Aboardofdirectorshasthreeformalresponsibilities:appointtheofficersofthe firm,declaredividends,andoverseetheaffairsofthecorporation. http://www.ubs.com/1/g/media_overview/media_switzerland/images/boardofdirecto rs.html Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 13 I. CreatingaNewVentureTeam C.TheRoleoftheBoardofDirectors 4. Ifhandledproperly,acompany sboardofdirectorscanbeanimportant partofitsnewventureteam.Twowaysaboardofdirectorscanhelpa newfirmgetofftoagoodstartanddevelopwhat,itishoped,will becomeasustainablecompetitiveadvantagearebyprovidingguidance andlendinglegitimacy. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 14 I. CreatingaNewVentureTeam C.TheRoleoftheBoardofDirectors WaysaBoardofDirectorsCanHelpaNewVentureGetOfftoa GoodStart Function ImportanceofFunction Provide Guidance Althoughaboardofdirectorshasformalgovernance responsibilities,itsmostusefulroleistoprovide guidanceandsupporttothefirmsmanagers.Many foundersandCEOsinteractwiththeirboardmembers frequentlyandobtainimportantinputandadvice. LendLegitimacy Anotherimportantfunctionofaboardofdirectorsis tolendlegitimacytoafirm.Wellknownand respectedboardmembersbringinstantcredibilitytoa firm. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 15 I. CreatingaNewVentureTeam C.TheRoleoftheBoardofDirectors 5.FrequencyofMeetingsandCompensation Mostboardsofdirectorsmeetthreetofourtimesayear. Newventuresaremorelikelytopaytheirboardsincompanystockor askthemtoserveonavoluntarybasisratherthanpayacash honorarium. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 16 Chapter9:BuildingaNewVentureTeam TableofContents I. CreatingaNewVentureTeam A.TheFounderorFounders B.RecruitingandSelectingKeyEmployees C.TheRoleoftheBoardofDirectors II. RoundingOuttheTeam TheRoleofProfessionalAdvisors A.BoardofAdvisors B.LendersandInvestors C.OtherProfessionals Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 17 II. RoundingOuttheTeam TheRoleof ProfessionalAdvisors BoardofAdvisers LendersandInvestors Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser OtherProfessionals AprimerinEntrepreneurship Springsemester2008 18 II. RoundingOuttheTeam TheRoleof ProfessionalAdvisors A.BoardofAdvisors 1. Agrowingnumberofstartupsareformingadvisoryboardstoprovide themwithdirectionandadvice. 2. Anadvisoryboardisapanelofexpertswhoareaskedbyafirms managerstoprovidecounselandadviceonanongoingbasis. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 19 II. RoundingOuttheTeam TheRoleof ProfessionalAdvisors A.BoardofAdvisors 3. Unlikeaboardofdirectors,anadvisoryboardpossessesnolegal responsibilityforthefirmandgivesnonbindingadvice. 4. Anadvisoryboardcanbeestablishedforgeneralpurposesorcanbeset uptoaddressaspecificissueorneed.Forexample,somefirmshave customeradvisoryboardsthathelpthefirmidentifynewproductand serviceideas. 5. Mostboardsofadvisorshavebetweenfiveand15members. Companiestypicallypaythemembersoftheirboardofadvisorsasmall honorariumfortheirservice,eitherannuallyoronapermeetingbasis. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 20 II. RoundingOuttheTeam TheRoleof ProfessionalAdvisors A.BoardofAdvisors GuidelinestoOrganizingaBoardofAdvisers 1. Adviserswillbecomedisillusionediftheydontplayameaningfulrole inthefirmsdevelopmentandgrowth. 2. Afirmshouldlookforboardmemberswhoarecompatibleand complementoneanotherintermsofexperienceandexpertise. 3. Wheninvitingpeopletoserveonitsboardofadvisors,acompany shouldcarefullyspellouttotheindividualsinvolvedtherulesinterms ofaccesstoconfidentialinformation. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 21 II. RoundingOuttheTeam TheRoleof ProfessionalAdvisors BoardofAdvisersofUgobe (http://www.ugobe.com/) ((http://www.ubs.com/1/g/media_overview/media_switz AdvisoryBoard Name Profession Roleon erland/images/boardofdirectors.h StevenMayer Advisertocorporationssuch asIntelandNintendo Addslegitimacyandprovidesthe firmadviceonmanagementissues CurtisSasaki VicePresident,Sun Microsystems Addslegitimacyandprovidesthe firmadviceproduct/marketissues Partner,U.S.VenturePartners Addslegitimacyandprovidesthefirm adviceonfinancialrelatedissues PhilSchlein AbrahamWei BillHillard SeniorManagingDirector, ChinavestMerchantBank ManagingPartner,Hillard Equities/SonnHill Consulting Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser Addslegitimacyandprovidesthefirm adviceonfinancialrelatedissues Addslegitimacyandprovidesthefirm adviceonfinancial andmanagement relatedissues AprimerinEntrepreneurship Springsemester2008 22 II. RoundingOuttheTeam TheRoleof ProfessionalAdvisors B.LendersandInvestors 1. Asemphasizedthroughoutthisbook,lendersandinvestorshavea vestedinterestinthecompaniestheyfinance,oftencausingthemto becomeveryinvolvedinhelpingthefirmstheyfund. 2. Aswiththeothernonemployeemembersofafirmsnewventure team,lendersandinvestorshelpnewfirmsbyprovidingguidanceand lendinglegitimacy,andassumethenaturalroleofprovidingfinancial oversight. 3. Insomeinstances,lendersandinvestorsalsoworkhardtohelpnew firmsfillouttheirmanagementteams. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 23 II. RoundingOuttheTeam TheRoleof ProfessionalAdvisors B.LendersandInvestors BeyondFinancingandFunding:WaysLendersandInvestorsAddValuetoan EntrepreneurialVenture Helpidentifyandrecruitkey managementpersonnel Provideinsightintotheindustryand marketsinwhichtheventureintends toparticipate Helptheventurefinetuneitsbusiness model Serveasasoundingboardfornew ideas Provideintroductionstoadditional sourcesofcapital Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser Serveonthenewventuresboardof directorsorboardofadvisors AprimerinEntrepreneurship Springsemester2008 24 II. RoundingOuttheTeam TheRoleof ProfessionalAdvisors C.OtherProfessionals Attimes,otherprofessionalsassumeimportantrolesinanewventures success.Attorneys,accountants,andbusinessconsultantsareoften goodsourcesofcounselandadvice. a. Aconsultantisanindividualwhogivesprofessionalorexpert advice.Newventuresvaryinhowmuchtheyrelyonbusiness consultantsfordirection. b. Consultantsfallintotwocategories:paidconsultantsand consultantswhoaremadeavailableforfreeoratareducedrate throughanonprofitorgovernmentagency. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 25 A primer in Entrepreneurship Prof. Dr. Ulrich Kaiser Institute for Strategy and Business Economics for Economics University of Zurich Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser Spring semester 2008 AprimerinEntrepreneurship Springsemester2008 26 Chapter10:GettingFundingorFinancing TableofContents I. TheImportanceofGettingFinancingorFunding II. SourcesofEquityFunding III. SourcesofDebtFinancing IV. CreativeSourcesofFinancingandFunding Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 27 I. TheImportanceofGettingFinancingor Funding A.WhyMostNewVenturesNeedFunding TheNatureoftheFundingandFinancingProcess Few Fewpeopledealwiththeprocessofraisinginvestmentcapitaluntilthey needtoraisecapitalfortheirownfirm. Asaresult,manyentrepreneursgoaboutthetaskofraisingcapital haphazardlybecausetheylackexperienceinthisarea. WhyMostNewVenturesNeedFundingnextslide Universityof InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 28 I. TheImportanceofGettingFinancingor Funding A.WhyMostNewVenturesNeedFunding Universityof Zurich ISU Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 29 I. TheImportanceofGettingFinancingor Funding B.SourceofPersonalFinancing AlternativesforRaisingMoneyforaStartUpFirm PersonalFunds EquityCapital DebtFinancing Other(Creative)Sources Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 30 I. TheImportanceofGettingFinancingor Funding B.SourceofPersonalFinancing 1. Typically,theseedmoneythatgetsacompanyoffthegroundcomes fromthefoundersthemselvesfromtheirpersonalsavings,mortgages, andcreditcards,andbytappingintothecashvalueoflifeinsurance. 2. Friendsandfamilyarethesecondsourceoffundsformanynew ventures.Thisformofcontributionoftencomesasloansorinvestments, butcanalsoinvolveoutrightgifts,forgoneordelayedcompensation,or reducedfeesorrent. 3. Anothersourceofseedmoneyfornewventuresisreferredtoas bootstrapping.Bootstrappingistheuseofcreativity,ingenuity,and anymeanspossibletoobtainresourcesotherthanborrowingmoneyor raisingcapitalfromtraditionalsources. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 31 I. TheImportanceofGettingFinancingor Funding Bootstrapping Buyingusedinsteadof newequipment Coordinatingpurchases withotherbusinesses Leasingequipment insteadofbuying Obtainingpaymentsin advancefromcustomers Minimizingpersonal expenses Avoidingunnecessary expenses Sharingofficespace withotherbusinesses Applyingforand obtaininggrants Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 32 I. TheImportanceofGettingFinancingor Funding C.PreparingtoRaiseDebtorEquityFinancing 1. Step1:Determinepreciselyhowmuchmoneyisneeded. 2. Step2:Determinethemostappropriatetypeoffinancingorfunding. a. Equityfinancingmeansexchangingpartialownershipinafirm, usuallyintheformofstock,forfunding. b. Debtfinancingisgettingaloan. 3. Step3:Developastrategyforengagingpotentialinvestorsorbankers. Anelevatorspeechisabrief,carefullyconstructedstatementthat outlinesthemeritsofabusinessopportunity. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 33 I. TheImportanceofGettingFinancingor Funding C.PreparingtoRaiseDebtorEquityFinancing PreparationforDebtorEquityFinancing Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 34 I. TheImportanceofGettingFinancingor Funding C.PreparingtoRaiseDebtorEquityFinancing Twomostcommonalternativesforraisingmoney Alternative Equityfunding Debtfinancing Explanation Equityfundingmeansexchangingpartialownershipinafirm,usually intheformofstock,forfunding.Angelinvestors,privateplacement, venturecapital,andinitialpublicofferingsarethemostcommon sourcesofequityfunding.Equityfundingisnotaloanthemoney thatisreceivedisnotpaidback.Instead,equityinvestorsbecome partialownersofafirm. Debtfinancingisgettingaloan.Themostcommonsourcesof debtfinancingarecommercialbanksandtheSmallBusiness Administration(throughitsguaranteedloanprogram). Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 35 I. TheImportanceofGettingFinancingor Funding C.PreparingtoRaiseDebtorEquityFinancing MatchingaNewVenturesCharacteristicswiththeAppropriateFormofFinancing orFunding Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 36 I. TheImportanceofGettingFinancingor Funding C.PreparingtoRaiseDebtorEquityFinancing ElevatorSpeech Anelevatorspeechisabrief,carefullyconstructedstatementthatoutlines themeritsofabusinessopportunity. Whyisitcalledanelevatorspeech? Ifanentrepreneursteppedintoanelevatoronthe25th floorofabuilding andfoundthatbyastrokeofluckapotentialinvestorwasinthesame elevator,theentrepreneurwouldhavethetimeittakestogetfromthe 25th floortothegroundfloortotrytogettheinvestorinterestedinhisor heropportunity.Thistypeofchanceencounterwithaninvestorcallsfor aquickpitchofonesbusinessidea.Thisquickpitchhastakenonthe nameelevatorspeech. Mostelevatorspeechesare45secondstotwominuteslong. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 37 I. TheImportanceofGettingFinancingor Funding C.PreparingtoRaiseDebtorEquityFinancing GuidelinesforPreparinganElevatorSpeech Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 38 II. SourcesofEquityFunding VentureCapital BusinessAngels InitialPublic Offerings Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 39 II. SourcesofEquityFunding Venturecapital: broadsubcategoryofprivateequity;referstoequity investmentsmadeforthelaunch,earlydevelopment,orexpansionofa business. Privateequity:assetclassconsistingofequitysecuritiesinoperatingcompanies thatarenotpubliclytradedonastockexchange(keyword:leveragedbuyout). Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 40 II. A. SourcesofEquityFunding BusinessAngels(http://www.businessangels.ch/; http://www.asban.ch/) 1. Businessangelsareindividualswhoinvesttheirpersonalcapitaldirectly instartups. a. Theprototypicalbusinessangelisabout50yearsold,hashigh incomeandwealth,iswelleducated,hassucceededasan entrepreneur,andisinterestedinthestartupprocess. b. ThenumberofangelinvestorsintheU.S.hasincreaseddramatically overthepastdecade,partlybecauseofthehighreturnssome report. c. Businessangelsarevaluablebecauseoftheirwillingnesstomake relativelysmallinvestments.Thisgivesaccesstoequityfundingtoa startupthatneedsjust$50,000ratherthanthe$1millionminimum investmentthatmostventurecapitalistsrequire. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 41 II. SourcesofEquityFunding B.VentureCapital 1. Venturecapitalismoneythatisinvestedbyventurecapitalfirmsin startupsandsmallbusinesseswithexceptionalgrowthpotential. 2. Venturecapitalfirmsarelimitedpartnershipsofmoneymanagerswho raisemoneyinfundstoinvestinstartupsandgrowingfirms.The funds,orpoolsofmoney,areraisedfromwealthyindividuals,pension plans,universityendowments,foreigninvestors,andsimilarsources. 3. Manyentrepreneursgetdiscouragedwhentheyarerepeatedlyrejected forventurecapitalfunding,eventhoughtheymayhaveanexcellent businessplan.Venturecapitalistsarelookingforthehomerun,and sorejectthemajorityoftheproposalstheyconsider. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 42 II. SourcesofEquityFunding C.InitialPublicOffering 1. AnIPOisthefirstsaleofstockbyafirmtothepublic.Whenacompany goespublic,itsstockistypicallytradedononeofthemajorstock exchanges. 2.Althoughtherearemanyadvantagestogoingpublic,itisacomplicated andexpensiveprocess.Thefirststepistohireaninvestmentbank.An investmentbankisaninstitution,suchasCreditSuisseFirstBoston,that actsasanunderwriteroragentforafirmissuingsecurities.The investmentbankactsasthefirmsadvocateandadvisor,andwalksit throughtheprocessofgoingpublic. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 43 II. SourcesofEquityFunding C.InitialPublicOffering Fourreasonsthatmotivatefirmstogopublic Reason1 Isawaytoraise equitycapitalto fundcurrentand futureoperations. Reason2 Reason3 Reason4 AnIPOraisesa firmspublic profile,makingit easiertoattract highquality customers, alliancepartners, andemployees. AnIPOisaliquidity eventthatprovidesa meansfora company shareholders (includingits investors)tocash outtheir investments. Bygoingpublic,a firmcreates anotherformof currencythatcan beusedtogrow thecompany. http://www.xcite.de/RoadshowsIPOPostbank2_89_53.html Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 44 III. SourcesofDebtFinancing A.CommercialBanks Commercial Banks Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser SBAGuaranteed Loans AprimerinEntrepreneurship Springsemester2008 45 III. SourcesofDebtFinancing A.CommercialBanks 1. Historically,commercialbankshavenotbeenviewedaspracticalsources offinancingforstartupfirms.Thissentimentisnotaknockagainst banks;itisjustthatbanksareriskadverse,andfinancingstartupsisrisky business. 2. Therearetworeasonsthatbankshavehistoricallybeenreluctanttolend moneytostartups: a. First,asmentionedpreviously,banksareriskadverse.Inaddition, banksfrequentlyhaveinternalcontrolsandregulatoryrestrictions prohibitingthemfrommakinghighriskloans. b. Second,lendingtosmallfirmsisnotasprofitableaslendingtolarge firms.Inmanyinstances,itissimplynotworthabankerstimetodo theduediligencenecessarytodeterminetheentrepreneursrisk profile. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 46 III. SourcesofDebtFinancing B.SBAGuaranteedLoans 1. Approximately50percentofthe9,000banksintheUnitedStates participateintheSBAGuaranteedLoanProgram.Whiletheseloans typicallyarentavailabletostartups,theyareanimportantsourceof fundingforsmallbusinessesingeneral. 2. ThemostnotableSBAprogramavailabletosmallbusinessesisthe7(A) LoanGuaranteeProgram.Thisprogramaccountsfor90percentofthe SBAsloanactivity.Almostallsmallbusinessesareeligibletoapplyfor anSBAguaranteedloan. 3. TheSBAcanguaranteeasmuchas85percent(debttoequity)onloans upto$150,000,and75percentonloansofmorethan$150,000. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 47 III. CreativeSourcesofFinancingand Funding Leasing StrategicPartners SmallBusiness Innovation ResearchGrants Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 48 III. CreativeSourcesofFinancingand Funding A.Leasing 1. Aleaseisawrittenagreementinwhichtheownerofapieceofproperty allowsanindividualorbusinesstousethepropertyforaspecifiedperiod oftimeinexchangeforpayments. 2. Themajoradvantageofleasingisthatitenablesacompanytoacquire theuseofassetswithverylittle,orno,downpayment. 3. Thetwomostcommontypesofleasesthatnewventuresenterintoare leasesforfacilitiesandleasesforequipment. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 49 III. CreativeSourcesofFinancingand Funding B.GovernmentGrants 1. TheSmallBusinessInnovationResearch(SBIR)andtheSmallBusiness TechnologyTransfer(STTR)programsaretwoimportantsourcesof earlystagefundingfortechnologyfirms.Theseprogramsprovidecash grantstoentrepreneurswhoareworkingonprojectsinspecificareas. 2. TheSBIRProgramisacompetitivegrantprogramthatprovidesmore than$1billionperyeartosmallbusinessesforearlystageand developmentprojects.Eachyear,10federaldepartmentsandagencies arerequiredbytheSBIRtoreserveaportionoftheirresearchand developmentfundsforawardstosmallbusinesses. http://www.bbt.admin.ch/kti/ Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 50 III. CreativeSourcesofFinancingand Funding B.GovernmentGrants a. TheSBIRisathreephaseprogram,meaningthatfirmsthatqualify havethepotentialtoreceivemorethanonegranttofunda particularproposal. b. Historically,lessthan15percentofallphaseIproposalsarefunded, andabout30percentofallphaseIIproposalsarefunded.The payoff forsuccessfulproposals,however,ishigh.Themoneyis essentiallyfree.Itisagrant,meaningthatitdoesnthavetobe paidback,andnoequityisthefirmisatstake. 3. TheSTTRProgramisavariationoftheSBIRforcollaborativeresearch projectsthatinvolvessmallbusinessesandresearchorganizations,such asuniversitiesandfederallaboratories. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 51 III. CreativeSourcesofFinancingand Funding B.GovernmentGrants SmallBusinessInnovationResearch(SBIR):ThreePhaseGrantProgram Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 52 III. CreativeSourcesofFinancingand Funding C.StrategicPartners 1. Strategicpartnersareanothersourceofcapitalfornewventures. Indeed,strategicpartnersoftenplayacriticalroleinhelpingyoung firmsfundtheiroperationsandroundouttheirbusinessmodels. 2. Biotechnology,forexample,reliesheavilyonpartnersforfinancial support.Biotechfirms,whicharetypicallyfairlysmall,oftenpartner withlargerdrugcompaniestoconductclinicaltrialsandbringproducts tomarket. Universityof Zurich ISU InstituteforStrategyandBusinessEconomics UlrichKaiser AprimerinEntrepreneurship Springsemester2008 53
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Chapter 3Feasibility AnalysisBruce R. BarringerR. Duane Ireland2010 Pearson Education3-1Chapter Objectives1 of 31. Explain what a feasibility analysis is and why itsimportant.2. Discuss the proper time to complete a feasibilityanalysis when dev
FIU - ECON - 101
Chapter 4Writing a BusinessPlanBruce R. BarringerR. Duane Ireland2010 Pearson Education4-1Chapter Objectives1 of 21. Explain the purpose of a business plan.2. Discuss the two primary reasons for writing abusiness plan.3. Describe who reads a b
FIU - ECON - 101
Chapter 5Industry andCompetitor AnalysisBruce R. BarringerR. Duane Ireland2010 Pearson Education5-1Chapter Objectives1 of 21. Explain the purpose of an industry analysis.2. Identify the five competitive forces that determineindustry profitabili
FIU - ECON - 101
Chapter 6Developing anEffective BusinessModelBruce R. BarringerR. Duane Ireland2010 Pearson Education6-1Chapter Objectives1 of 21. Describe a business model.2. Explain business model innovation.3. Discuss the importance of having a clearlyart
FIU - ECON - 101
Chapter 7Preparing theProper Ethical andLegal FoundationBruce R. BarringerR. Duane Ireland2010 Pearson Education7-1Chapter Objectives1 of 31. Describe how to create a strong ethical culture in anentrepreneurial venture.2. Explain the importanc
FIU - ECON - 101
Chapter 8Assessing a NewVentures FinancialStrength andViabilityBruce R. BarringerR. Duane Ireland2010 Pearson Education8-1Chapter Objectives1 of 21. Explain the two functions of the financialmanagement of a firm.2. Identify the four main fina
FIU - ECON - 101
Chapter 9Building a NewVenture TeamBruce R. BarringerR. Duane Ireland2010 Pearson Education9-1Chapter Objectives1 of 21. Identify the primary elements of a new venture team.2. Explain the term liabilities of newness.3. Discuss the difference bet
FIU - ECON - 101
Chapter 10Getting Financingor FundingBruce R. BarringerR. Duane Ireland2010 Pearson Education10-1Chapter Objectives1 of 21. Explain why most entrepreneurial ventures need toraise money during their early life.2. Identify the three sources of pe
FIU - ECON - 101
Chapter 11Unique MarketingIssuesBruce R. BarringerR. Duane Ireland2010 Pearson Education11-1Chapter Objectives1 of 21. Explain the purpose of market segmentation.2. Describe the importance of selecting a target market.3. Explain why its importa
FIU - ECON - 101
Chapter 12The Importance ofIntellectualPropertyBruce R. BarringerR. Duane Ireland2010 Pearson Education12-1Chapter Objectives1 of 21. Define the term intellectual property and describeits importance.2. Discuss the four major forms of intellect
FIU - ECON - 101
Chapter 13Preparing for andEvaluating theChallenges of GrowthBruce R. BarringerR. Duane Ireland2010 Pearson Education13-1Chapter Objectives1 of 21. Explain the term sustained growth.2. Describe how firms can properly prepare for growth.3. Disc
FIU - ECON - 101
Chapter 14Strategies for FirmGrowthBruce R. BarringerR. Duane Ireland2010 Pearson Education14-1Chapter Objectives1 of 21. Explain the difference between internal growthstrategies and external growth strategies.2. Identify the keys to effective
FIU - ECON - 101
Chapter 15FranchisingBruce R. BarringerR. Duane Ireland2010 Pearson Education15-1Chapter Objectives1 of 21. Explain franchising and how it differs from otherforms of business ownership.2. Describe the difference between a product andtrademark f
SUNY Stony Brook - HIS - 103
History 103Aug. 31Introduction to course;When Old Worlds CollideWebHIS 103 Class etiquetteGetting startedSections WILL meet this Friday.It is important that you register for the section youplan to attend. If you want to switch, you MUST doit bef
SUNY Stony Brook - HIS - 103
History 103When Old Worlds Collide:Contact, Conquest, CatastropheSept. 7, 2011WebReminders: class etiquetteReminders for week 2Lecture outline posted before class on BB underDocuments sectionLook in SAME BB section Documents forReading packet no
SUNY Stony Brook - HIS - 103
History 103England Discovers Its Colonies:Empire, Liberty, and ExpansionSept. 12, 2011WebReminders: class etiquetteReminders for week 3Do Packet no. 3 readings and reading review questionsin (posted in BB documents BEFORE you come toyour section
SUNY Stony Brook - HIS - 103
History 103England Discovers Its Colonies:Empire, Liberty, and ExpansionSept. 14, 2011WebReminders: class etiquetteBonus question tally after round 1Section01020304050607no. of winners1000241Exploring the spectrum ofsettlementsQue
SUNY Stony Brook - HIS - 103
History 103Provincial America and the Struggle fora ContinentSept. 19, 2011WebReminders: class etiquetteReview: Last week: very fast overview of spectrum of settlement in 17thc English colonies, before and after Restoration colonies Section: look
SUNY Stony Brook - HIS - 103
History 103Provincial America and the Struggle fora ContinentSept. 21, 2011WebReminders: class etiquetteRemindersFor section this Friday and Monday: do characterexerciseIf you didnt get a character assigned in previoussection, pick one from shee
SUNY Stony Brook - HIS - 103
History 103Reform, Resistance, RevolutionSept. 26, 2011WebReminders: class etiquetteReminders and some GOODnewsNo lecture on Wednesday: its a correction dayGo to your Friday classes on Wed., which includesSections 1 and 6Midterm questions will b
SUNY Stony Brook - HIS - 103
History 103Reform, Resistance, RevolutionOct. 3, 2011WebReminders: class etiquetteRemindersMidterm questions were posted at 4 AM (!) underA SSIGNMENTS.Note Ive extended the due date to Oct. 12 so you havemore time to absorb this weeks material on
SUNY Stony Brook - HIS - 103
History 103Reform, Resistance, RevolutionOct. 5, 2011WebReminders: class etiquetteReminders and announcements Midterm due date extended to Oct. 12. Midterm covers material through CHAPTER FIVE ofMurrin text and READING PACKET FIVE onBlackboard.
SUNY Stony Brook - HIS - 103
History 103The Revolutionary RepublicOct. 14, 2009WebReminders: class etiquetteHIS 103 Bonus question for todayIf you think you know the answer to this question, DONOT SAY IT ALOUD but instead write it on one of theentry forms the TAS will give yo
SUNY Stony Brook - HIS - 103
History 103The Revolutionary RepublicOct. 12, 2011WebReminders: class etiquetteReminders and announcements Midterm due today (as if you didnt know it )! If you havent yet submitted the midterm to Safeassign, please notethat you must submit both es
SUNY Stony Brook - HIS - 103
History 103Completing the RevolutionOct. 17, 2011WebReminders: class etiquetteannouncementsPolicy on late papers posted on BBHope to return midterms by next Monday, Oct. 24Reminder that papers are due on Nov. 30, not so faraway.Final exam will c
SUNY Stony Brook - HIS - 103
History 103Completing the RevolutionOct. 19, 2011WebReminders: class etiquetteThe U.S. ConstitutionA remarkable documentNote short length: only 4200 wordsAmended only 27 times, 10 of them at beginning, foradditional 3000 wordsNote for comparison
SUNY Stony Brook - HIS - 103
History 103Completing the RevolutionOct. 24, 2011WebReminders: class etiquetteNews of noteMidterms will be returned at endof lecture today. More about themlater.Instructions for paper dueNovember 30 are posted on BB.Check them out!Divisions am
SUNY Stony Brook - HIS - 103
History 103Completing the RevolutionOct. 26, 2011WebReminders: class etiquetteNews of noteMidterms were returned at end oflecture Monday. If you didnt getyours, pick it up at end of lecture.Instructions for paper dueNovember 30 are posted on BB.
SUNY Stony Brook - HIS - 103
History 103The Market RevolutionOct. 31, 2011WebReminders: class etiquetteReview: Four Presidents Washington, Adams, Jefferson, andMadison -try to steer clear of foreign entanglements US did not want to get embroiled in European conflictsgenerate
SUNY Stony Brook - HIS - 103
History 103Northern Transformations/The Old South, 1790-1850Nov. 7, 2011WebReminders: class etiquettea divided economydividedbefore 1820sbecomes an more integratedeconomy (after 1820) Rural west Economic growth powered by semi subsistence agr
SUNY Stony Brook - HIS - 103
History 103Slavery in the Old South,1790-1850Nov. 9, 2011WebReminders: class etiquetteNews of note Instructions for paper due November 30 are now posted in the Assignmentssection of the main course BB site. Next week: no additional readings for r
SUNY Stony Brook - HIS - 103
History 103Democrats and WhigsNov. 14, 2011WebReview: A complicated institution: the case of ThomasJefferson, Martha Jefferson and Sally HemingsDNA testing confirmed what wasrumored in early 1800sReligion and resistance Southern Evangelicals embr
SUNY Stony Brook - HIS - 103
History 103Democrats and Whigs, the Politics ofSocial ReformNov. 16, 2011WebJackson and the Indians Jacksons views ofIndians: typical of backcountry hostility After War of 1812,gained fame as Indianfighter in unauthorizedwar against Seminoles
SUNY Stony Brook - HIS - 103
History 103The Politics of Social Reform/ ManifestDestinyNov. 21, 2011WebNews of notePapers are due on November 30. Dont forget to printout special title page AND submit to SafeAssign.An extensive review sheet for the final exam will beprovided a
SUNY Stony Brook - HIS - 103
History 103Manifest DestinyNov. 28, 2011WebNews of notePapers are due this Wednesday November 30. Dontforget to print out special title page AND submit toSafeAssign.An extensive review sheet for the final exam has beenposted on BB. Its in the ass
SUNY Stony Brook - HIS - 103
History 103Manifest Destiny and the Compromiseof 1850Nov. 30, 2011WebNews of notePapers are due today. Dont forget to print out specialtitle page AND submit to SafeAssign.Papers received by 4 PM today will be counted as inon time. Any submitted a
USC - CIVIL ENG - 408
CE 408/JohnsonComputer Assignment #1Write MATLAB programs to solve the following problems. You may work together in groups of atmost 3 (turn in just one completed assignment for your group).Problem 1: Using the functions discussed in 6.0 of the MATLAB
USC - CIVIL ENG - 408
CE 408/JohnsonComputer Assignment #2Conditional ProbabilityWrite MATLAB programs to solve the following problems. You may work together in groups of at most 3. (Turn inone copy of your results.)Applying the knowledge you gained in the last computer a
USC - CIVIL ENG - 408
CE 408/JohnsonComputer Assignment #3Parameter Estimation and Functions of a Random VariablePurposeThus far, we have dealt with the problem of characterizing the behavior of a random variable. Thenext logical problems to be solved are how, given a set
USC - CIVIL ENG - 408
USC - CIVIL ENG - 408
USC - CIVIL ENG - 408
USC - CIVIL ENG - 408
IRoles of Probability andStatistics in Engineering11INTRODUCTIONengineers, it is imIn dealing with real world problems, uncertainties are unavoidable. Asmajor sources of uncertainty in engineering.portant that we recognize the presence of allthat
USC - CIVIL ENG - 408
2%Chapter 1, Roles of Probability and Statistics in Engineering.\ Survey of Progress in House Building. Building iich(saIl Management. VoL 7(4). April 1969, pp. 88 9!(san. WI . and Snodgrass. DV. Machine Stress Rated Lumber:h.d knae to Design, Journa
USC - CIVIL ENG - 408
2C iapter 2 Fundamentals of Probabdity Models2.3 Mathematics of Probability53For three events, the multiplication rule would give,pi )andP(fr)77At the intersection, if a vehicle is definitely makine a turn, the probability that it will be a righ
USC - CIVIL ENG - 408
USC - CIVIL ENG - 408
Formulas( A B ) C = AC BC( AB ) C = ( A B ) ( A C )E1 E2 = E1 E2E1 E2 = E1 E2P( A) = 1 P( A)P( A B) = P( A) + P(B) P( AB)nP( A) =P( A E i) P(E i)P(E i A) = -P( A)P( A E j ) P(E j )j=1nP( AB)P( A B) = -P(B) P( A BE j ) P(E jP( A B) =B)j=
USC - CIVIL ENG - 408
CE 408/JohnsonHomework Format InstructionsThe problems you turn in must conform to the standards of good engineering practice as outlinedbelow and as in the example on the next page. Nonconforming homework will not be graded.1. Homeworks should be wri
USC - CIVIL ENG - 408
HW #1 Solutions (Fall 2011)Assigned problems:2.5, 2.10, 2.18, 2.19, 2.232.5 (Confirmed)(a)Locations LocationsLoad at B Load at Cof W1of W2MAProbabilityE1000B50005,0000.045C050010,0000.075B20002,0000.05BB70007,0000.075X
USC - CIVIL ENG - 408
HW #2 Solutions (Fall 2011)Assigned problems:2.24, 2.37, 2.48, 2.64, 2.652.24(a)Let A, B denote the event of the respective engineers spotting the error. Let E denote the event thatthe error is spotted, P(E) = P(AB)= P(A) + P(B) P(AB)= P(A) + P(B)
USC - CIVIL ENG - 408
HW #3 Solutions (Fall 2011)Assigned problemsAng & Tang: 2.41, 2.42, 2.58, 3.8, 3.9, 3.122.41Let L, N, H denote the event of low, normal and high demand respectively; also O and Gdenote oil and gas supply is low respectively.(a)Given normal energy d
USC - CIVIL ENG - 408
HW #4 Solutions (Fall 2011)Assigned problemsAng & Tang: 3.38, 3.41, 3.42, 3.45, 3.463.38Let, T = The present traffic volume = N(200,60)(a) P(T>350) = 1 - (350 - 200)/60) = 1 - (2.5) = 0.00621(b) Let, T1 = Traffic volume after 10 years. T = 200 + 0.
USC - CIVIL ENG - 408
HW #5 Solutions (Fall 2011)Assigned problemsAng & Tang: 3.7, 3.14, 3.18, 3.19, 3.26Not checked3.7NOTE: in the problem the range of x is x > 10 not x > 0(a) The mean and median of X are 13.3 lb/ft2 and 11.9 lb/ft2, respectively (as done inProblem 3-
USC - CIVIL ENG - 408
HW #6 SolutionsAng and Tang: 3.30, 3.34, 3.54, 3.58, 3.59Due: 10/20/20113.30Given: both I and N are Poisson processes, with I = 0.01/mi and N = 0.05/mi. Hence, along a 50-mile section ofthe highway, I and N have Poisson distributions with respective
USC - CIVIL ENG - 408
HW #7 AssignmentDue Thurs Oct 27, 2011Problem #1:Let X take the values 0, 1, 2, 3, 4 and 5 with probabilities p0 , p1 , p2 , p3 , p4 and p5 . Find theprobability mass function of Y = ( X 2)2Y takes on the values 4,1,0,1,4,9 corresponding to each X va
USC - CIVIL ENG - 408
HW#8SolutionsAngandTang:4.3,4.8,4.13,4.33,4.384.3(a)T = total power supply = N ( T , T )T = 100 + 200 + 400 = 700Where T = 152 + 402 + 1002 = 108.74(b)P(Normal weather) = P(W) = 2/3P(Extreme weather) = P(E) = 1/3P(Power shortage) = P(S) = P(SW