Chapter_4_Business_Concept__Jan_22_2009

Chapter_4_Business_Concept__Jan_22_2009 - CHAPTER 4...

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C HAPTER 4 D EVELOPING Y OUR B USINESS C ONCEPT 4.0 E NTREPRENEUR ' S D IARY When I was trying to start my fish business, I had a very difficult time trying to raise the capital to launch the business; I needed about $500,000. The central idea of the business was to raise tilapia (no one even knew what a tilapia was back then) using indoor recirculating aquaculture system (RAS) technology, which was far removed from a tried and tested technology at that time. The problem was that just about every investment that had been made into starting fish farms had failed miserably. Investors often just laughed at you when you tried to initiate a conversation about investing in aquaculture. It even created a new term, "aqua-shyster". It really helps to convince a potential investor of your business' viability if you can take them to a working prototype of what you are trying to implement full-scale. I could take investors to my research operation at Cornell University and show them a single tank set- up, but I couldn't show them a working farm or even refer them to any existing farms in the U.S. that you could consider economically successful. My somewhat standard response became "…if it was easy, everyone would be doing it already! " Being a first-mover has the often dreaded result of being a failure, but the excitement of a huge upside! Eventually, I found the necessary investors, but it wasn't easy. I guess I did convince some of them. 4.1 O VERVIEW Your current employer has indicated that you can negotiate a license for a piece of intellectual property (IP) that you have developed in your own laboratory that addresses a market need that you have identified. You understand how this technology works and have a pretty good idea of how much it will cost to manufacture. You think it is time to pull the trigger and launch your new business. You realize that this will take a lot 1
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more capital than you have, which you estimate to be around $300,000 to reach a breakeven basis. You don’t have these funds so you will have to raise the money from outside investors. How do you do this? All successful fundraising is centered around you being able to convince someone else that you will make them money on their investment. Being able to explain to others your company's business model or concept is a fundamental requirement and what we will focus on in this chapter. You can think of your business concept as being an expansion on your Mission Statement. Part of the “secret handshake” rules in the entrepreneurial world is to use the distinctive jargon of this community. Engineers (the primary target audience for this text) have one distinct disadvantage in the entrepreneurial world: they are engineers and aren’t familiar with the jargon. As undergraduate college students, engineers have had mostly four years of science, physics and other technical courses that did not expose them to the jargon of the business world. One of the major objectives of this text is to familiarize you with these terms and phrases
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This note was uploaded on 02/03/2009 for the course BEE 489 taught by Professor Timmons during the Spring '09 term at Cornell University (Engineering School).

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Chapter_4_Business_Concept__Jan_22_2009 - CHAPTER 4...

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