MBA Guide to Startup Finance

SHORT MBA GUIDE
TO STARTUP FINANCE
#WHAT INVESTORS LOOK FOR?
#HOW MUCH FUNDING DO I TAKE IN?
#WHAT ARE FUNDING ROUNDS?
# DIGITAL VENTURE FUNDING:
> INITIAL COIN OFFERING
> TYPES OF CROWDFUNDING
MICHAL GROMEK
#SE.LINKEDIN.COM/IN/MGROMEK
EXECUTIVE EDUCATION
FEBRUARY 2019 - EXECUTIVE MBA SESSION

SOURCE: HTTPS://WWW.INSTAGRAM.COM/P/W2BUMLQLRB/

PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/
ADAPTED FROM J.MULLINS
IN 20 SECONDS
OUR SESSION SHOULD HELP YOU AVOID IMPENDING DISASTERS
WITH TAKING IN FUNDING INTO YOUR COMPANIES BEFORE YOU
PITCH YOUR IDEAS AND CREATE BUSINESS PLANS.
IT SHOULD HELP YOU TO ORGANISE YOUR KNOWLEDGE IN:
- SOURCES OF FUNDING
- ACTORS PROVIDING FUNDING
- TIMES AND FORMS TO TAKE IN FUNDING
- UNDERSTAND THE DIGITALISATION OF FUNDING
(CROWDFUNDING, INITIAL COIN OFFERING ETC.)
IT REVEALS THE SEVEN KEY ISSUES THAT INVESTORS EXAMINE
BEFORE THEY INVEST.
INTRIGUED? LET US START :)

REFLECT ON COMBINING:
STRATEGY+ TRUST + FUNDING
POSSIBILITIES + EXTERNAL FORCES +
PERSONAL BIAS

ANTICIPATED STRUCTURE
OF THE SESSION
FUNDING
READINGS
TIME
OF
FUNDING
TYPES
OF
FUNDING
TYPES
OF
INVESTORS
STARTUPS
HOW CAN WE APPLY
THIS KNOWLEDGE IN OUR STARTUP?
SLIDES WITH
YOUTUBE LINKS
TO INVESTIGATE FURTHER

ANTICIPATED STRUCTURE
OF THE SESSION
FUNDING
READINGS
TIME
OF
FUNDING
TYPES
OF
FUNDING
TYPES
OF
INVESTORS
STARTUPS
HOW CAN WE APPLY
THIS KNOWLEDGE IN OUR STARTUP?
SLIDES WITH
YOUTUBE LINKS
TO INVESTIGATE FURTHER
FURTHER:
+ TRUST / REPUTATION

#STAY IN TOUCH: HTTPS://WWW.LINKEDIN.COM/IN/MGROMEK/
HTTPS://WWW.SLIDESHARE.NET/MICHALGROMEK

CHANGE IN REGIONAL FINTECH BETWEEN 2011 - 2019
FORMER HEAD OF FINTECH AT FINANSINSPEKTIONEN
SWEDISH FINANCIAL SUPERVISORY AUTHORITY
STIG JOHANSSON
"Instead of speaking to experienced
compliance teams of bank
employees in sharp suits, with
FinTech we experienced to speak to
the representatives of financial
companies dressed in T-Shirts,
representing a different compliance
structure with a different angle of
view and lingo."
SOURCE: GROMEK, STOCKHOLM FINTECH REPORT (2018)

#LAST WEEK >>>

# Researcher on FinTech (SSE) - (ON CLOCKSTOPPER)
>>> Adoption and trust of Blockchain technology
# Head of Compliance - Safello.com Cryptocurrency
# Contributor - Forbes Magazine (Europe)
# Co-organiser Stockholm Fintech Week
# Head of Int. Finance - FundedByMe.com
# Country Head - Rocket Internet (FInTech)
# Board Member of a FinTech company
# Co-Author: Book, The Rise and Development of
FinTech, Accounts of Disruption from Sweden and Beyond,
Next Wave of FinTech Insurtech & Regtech (open access)
# Author: Stockholm FinTech Report 2018 (open access)
# Trainer Security Commission Malaysia
## Travel book author (in the future :)
#GOOD TO SEE YOU

# Researcher on FinTech (SSE) - (ON CLOCKSTOPPER)
>>> Adoption and trust of Blockchain technology
# Head of Compliance - Safello.com Cryptocurrency
# Contributor - Forbes Magazine (Europe)
# Co-organiser Stockholm Fintech Week
# Head of Int. Finance - FundedByMe.com
# Country Head - Rocket Internet (FInTech)
# Board Member of a FinTech company
# Co-Author: Book, The Rise and Development of
FinTech, Accounts of Disruption from Sweden and Beyond,
Next Wave of FinTech Insurtech & Regtech (open access)
# Author: Stockholm FinTech Report 2018 (open access)
# Trainer Security Commission Malaysia
## Travel & Cookbook author (in the future :)
#GOOD TO SEE YOU

DOES 'YOUR STARTUP'
NEED TO TAKE IN FUNDING?
IN CASE OF YES ...
HOW MUCH?
FROM WHOM (BA, VC; CROWDFUNDING)?
WHEN?
WHAT FOR?
WHAT DOES THE STARTUP OFFER IN RETURN?
(EQUITY, DEBT ...)
DO YOU RECOMMEND TO TAKE IN MORE FUNDING?
IN CASE - NO
DO YOU RECOMMEND TO TAKE FUNDING? (SEE ABOVE)
DO YOU AGREE WITH NOT TAKING IN FUNDING, WHY?

INDIVIDUALLY.
PLEASE REFLECT?

FUNDING YES / NO
WHICH TYPE OF FUNDING?
HOW MUCH?
WHAT FOR?
WHEN?
5 MINUTES
EXCHANGE WITHIN YOUR TEAM
AGREE ON COMMON OPINION
BE READY TO SHARE

GROUP 8
GROUP 10
HOW TO ACHIEVE AN
EXAMPLE FUNDING
PATHWAY?
SOURCE: https://www.crunchbase.com/organization/airbnb/funding-rounds (ACCESSED 15.02.2017)

TO MUCH OF THE FUNDING
DECREASES THE SENSE OF
URGENCY AND FOCUS ON SALES

"WE DIDNT FEEL THE URGENCY TO
FOCUS ON SALES" - CEO FIKABOX
PLANNING FOR FUNDING
IS ONLY AS GOOD AS THE QUALITY OF YOUR BUSINESS FORECAST
TO SMALL FUNDING ROUND
(PERMANENT FOCUS ON
FUNDING -
"IT TOOK ME AROUND 70% OF
MY TIME TO FOCUS ON FINANCE"
- CEO TIMESULIN

1320
GROWTH OF STARTUPS
15
30
45
60
M
O
N
TH
1
M
O
N
TH
2
M
O
N
TH
3
M
O
N
TH
4
M
O
N
TH
5
M
O
N
TH
6
0

1320
DESIRED GROWTH KPI
5
10
15
M
O
N
TH
1
M
O
N
TH
2
M
O
N
TH
3
M
O
N
TH
4
M
O
N
TH
5
M
O
N
TH
6
20
0
1320
10% GROWTH PER MONTH

WHAT IS REALLY NEEDED AND WHAT IS A LUXURY SCENARIO?
WHAT IS REALLY NEEDED
HOW WILL THE FUNDING REALLY BE USED?
WHAT SHOULD THIS BE USED FOR (BACKGROUND BIAS)
BUSINESS MAJORS - INTERNATIONALISATION
MARKETING - ONLINE OFFLINE MARKETING
PUBLIC RELATIONS - BIASED
ENGINEERING BACKGROUND - PRODUCT, PRODUCT, PRODUCT
YOU CAN PLAN AND CONTROL EXPENSES BY NOT REVENUE
PLEASE FOCUS ON SALES (!)

Picture:https://flic.kr/p/drV3LQ
STARTUP FINANCING CYCLE (MODEL)

STARTUP FINANCING CYCLE (STAGES OF FUNDING)
PRE-SEED FUNDING
SEED FUNDING
FOR MORE INFORMATION WATCH OUR PRESENTATION FROM LAST WEEK - LINK

CLICK HERE FOR VIDEO EXPLANATION
PRE-SEED FUNDING
FRIENDS, FAMILLY (AND "FOOLS"), BUSINESS ANGELS, PUBLIC FUNDING LIKE ALMI,
REWARDS BASED CROWDFUNDING, STING
PRE - SEED FUNDING - I HAVE AN IDEA
WHO IS PROVIDING PRE-SEED FUNDING?
WHICH STAGE OF DEVELOPMENT, SIZE AND PURPOSE
EARLIEST STAGE, DESIGN OF THE PRODUCT, PROVISION OF MARKET FIT, CREATION
OF THE COMPANY.

PRE-SEED FUNDING
SEED FUNDING
SERIES A / SERIES B

FRIENDS FAMILLY FOOLS
THEY JUST FUNDING, DON'T HOPE FOR STRATEGY TIPS
CAN BE A NIGHTMARE TO DEAL WITH THEM - SO FAR LITTLE
BUSINESS S EXPERIENCE (IT WAS FOR ME)
IN CASE BUSINESS FAILS THEY CAN TAKE IT PERSONALLY
DOWNSIDES
COMMUNICATE RISK CLEARLY
HAVE A SHAREHOLDER AGREEMENT
DON'T ASK FOR MONEY THAT THEY CAN NEED
TIPS:
UPSIGHTS
USE YOUR REPUTATION
DON'T CHECK CREDIBILITY
LESS BURACRATIC

BUSINESS ANGELS
BUSINESS ANGEL CAN BE STRONG INDIVIDUALS, AND SOME GOT
WEALTHY BECAUSE OF LUCK AND NOT NECESSARY EXPERIENCE.
SOME BUSINESS ANGELS LIKE TO HAVE MORE CONTROL THAN
WHAT FOUNDER ARE WILLING TO GIVE.
DOWNSIDES
SPEAK TO FOUNDERS OF COMPANIES WHERE BA'S
HAS INVESTED INTO. REVIEW THE BA'S
PERFORMANCE IN YOUR SECTOR
TIPS:
UPSIGHTS
INVEST ON EARLY STAGE, LIKE TO TAKE RISK
CAN OPEN DOORS WITH THEIR INFORMAL NETWORK
MONEY IS NOT A LOAN (USUALLY)
BUSINESSES OPERATE LONGER AND HAVE A HIGHER RATE OF RETURN
LINK TO HOW TO RAISE MONEY FROM ANGEL INVESTORS (PLEASE SKIP FIRST 12 MINUTES)

INITIAL COIN OFFERING
TECHNICALLY POSSIBLE INSTANTLY BUT STILL YET
A REGULATORY CHALLENGE.
DOWNSIDES
REFLECT ON THE DIFFERENCES BETWEEN EQUITY CROWDFUNDING, TRADITIONAL
SHARE ISSUE PROCESS, IPO VS EXTERNAL FUNDING. CHECK THE STATUS IN YOUR
JURISDICTION
TIPS:
UPSIGHTS
-POSSIBILITY TO REPLACE THE TRADITIONAL SHARE ISSUE
PROCESS WITH THE CREATION OF THE OWN CRYPTOCURRENCY
THAT CAN BE IMMEDIATELY TRADED BY THE PUBLIC.
KODAK COIN HAS RAISED 200M USD
A GUIDE TO GUIDE INITIAL COIN OFFERING (MAS SINGAPORE)

PRE-SEED FUNDING
SEED FUNDING
SERIES A / SERIES B
SERIES C

CLICK HERE FOR A VIDEO EXPLANATION
ABOUT STARTUP FUNDING
WE ARE NOW IN OUR C-SERIES SHARE ISSUE PROCESS AND CONSIDER 20M
INVESTMENT.
STAGES OF INVESTMENTS
WHAT DOES THE FOUNDER SAY TO YOU:
WHAT DOES THIS MEAN
THE COMPANY HAS AN SUCCESSFUL PROOF OF
CONCEPT, TEAM, EXPERIENCE IN RISING
FUNDING, SIGNIFICANT INVESTMENT AND
POTENTIAL SOME INT. EXPANSION

CLICK HERE FOR VIDEO EXPLANATION
ABOUT SERIES A FUNDING
BUSINESS ANGEL, EQUITY CROWDFUNDING, VENTURE CAPITAL (LATELY VC ARE
LESS LIKELY TO PROVIDE SERIES A FUNDING)
SERIES A - OPTIMISE PRODUCT & USER BASE
WHO IS PROVIDING SERIES A FUNDING
SCALING THE PRODUCT, EXPLORING THE TRUE MARKET FIT, INTRODUCTION OF
NEW FEATURES. IN THE PAST THE MEDIAN HAS BEEN AROUND 7M EURO. IT WENT
UP SIGNIFICANT IN RECENT YEARS TO 6.5 M-14M EURO
> INTERESTING CASE: AGGREGATE MEDIA - EQUITY FOR ADVERTISEMENT SPACE.

EXAMPLE OF AN VENTURE THAT RAISED SERIES C
200M USD
VENTURE CAPITAL, INSTITUTIONAL INVESTORS, HEDGE FUNDS
FUND REPRESENTATIVES
SERIES C (D, E, F... )
HOW IS PROVIDING SEED FUNDING
ACCELERATION BEYOND SERIES B, ACQUISITION OF COMPETITORS
OR PARTNERS, INTERNATIONALISATION. INVESTOR INJECT MONEY INTO
SUCCESSFUL BUSINESSES WITH THE
GOAL TO AT LEAST RECEIVE THE DOUBLE AMOUNT BACK.
KEYWORDS:
COMPETETIVE ADVANTAGE, MERGER
AND SYNERGISTIC PARTNERSHIP

VENTURE CAPITAL
LONG DUE DILLENGENCE PROCESS
TENDENCY 95% DISCOUNTED VALUATION METHOD
STRONG PERSONALITIES
SINCE 2009 > USUALLY LATE STAGE FINANCE (SERIES A+)
DOWNSIDES
UNDERSTAND HOW VC WORKS (PRESENTATION BELOW)
REVIEW WHEN THEY HAVE BEEN RAISING MONEY
AND IS THERE OWN PERFORMANCE
TIPS:
UPSIGHTS
MAYBE SMART MONEY
STRONG NETWORK
LONGTERM PARTNER 4.2% OF VC
EMPLOYEES ARE
FEMALE*
*SOURCE: http://fortune.com/2015/01/30/women-are-not-making-progress-in-male-
dominated-vc-world-data-shows/ (ACCESSED 20th OF JANUARY)
LINK TO HARVARD INNOVATION LAB ON HOW VC MAKE DECISION

WATCH A VIDEO ON MEZANINE FUNDING
IS A TERM WHEN A COMPANY DECIDES TO "GO PUBLIC" AND TO OFFER
THEIR SHARE ON A STOCK EXCHANGE- CLICK HERE FOR A VIDEO
EXPLANATION.
POSSIBLE SCENARIOS FOR YOUR STARTUP
PROJECT (BUT LESS LIKELY:))
IPO - INITIAL PUBLIC OFFERING
MEZANINE FUNDING
FUNDER IS OBTAINING A LOAN WITHOUT A COLLATERAL (AN
MOVABLE OR NONE MOVABLE ASSET THAT BACKS UP THE LOAN.
IN CASE OF A DEFAULT THE LENDER CONVERTS HIS DEBT INTO
SHARES. - CLICK HERE FOR A VIDEO EXPLANATION.
USUALLY USED WITH A TRACK RECORD AND REPUTATION USED
OFTEN TO PERFORM AN IPO. TYPICAL INTREST IS SOMEWHERE
BETWEEN 10% AND 22%

COMPREHENSIVE VIDEO EXPLENATIONAL
OF CONVIRTABLE LOAN
A COMPANY ISSUES A LOAN TO LENDERS AND AT A SPECIFIC DATE THE
INVESTORS CAN DECIDE IF THEY WOULD LIKE TO RECEIVE THEIR DEBT
REPAID OR CONVERT IT TO OWNERSHIP IN THE COMPANY.
LENDERS USUALLY RECEIVES A DISCOUNT RATE TO CONVERT INTO
VALUATION AT A LATER STAGE.
POSSIBLE SCENARIOS FOR YOUR STARTUP
PROJECT (BUT LESS LIKELY:))
COVERTABLE LOANS: (DEBT)
BRIDGE FINANCING (FORM OF CONVERTABLE DEBT)
IS A LOAN THAT CONVERTS TO EQUITY
THE INVESTOR CAN DECIDE ON THE TRIGGER POINT IF THE
LOAN WITH THE DISCOUNT SHOULD BE CONVERTED
ACCORDING TO AN OLD POST MONEY VALUE OR A NEW
PREMONEY VALUATION FOR NEXT ROUND.
WATCH A VIDEO ON BRIDGE FINANCING

OTHER FORMS:
CREDIT CARS, OVERDRAFTS = EXPENSIVE
INFORMAL DEBT
EQUITY INVESTMENT (ALMI INVEST)
DEBT AT AROUND 6%-10% (ALMI)
COLLATERAL GUARANTEE
EUROPEAN FUNDING (FRAMEWORK7)
VINNOVA (GRANTS
GRANTS GOVERNMENT
CAN BE VERY TIME-CONSUMING ADMINISTRATION
MIN. SIX MONTHS
LINK TO THE INITIATIVE OF THE EU COMMICION ON STARTUPS

#HOW TO PITCH
EARLY STAGE
COMPANIES?
#HOW TO PITCH
SERIES A, B, SERIES C?

#HOW TO PITCH
EARLY STAGE
COMPANIES?
#HOW TO PITCH
PLEASE REFLECT FOR
THREE MINUTES BY YOURSELF

#HOW TO PITCH
EARLY STAGE
COMPANIES?
#HOW TO PITCH
PLEASE REFLECT IN YOUR
GROUPS FOR THREE MINUTES
(PRE-SEED & SEED VS POST SEED)

STARTUP FINANCING CYCLE (WHAT DO YOU PITCH)
TEAM
VISION
MISSION
TRIGGER EMOTIONS
REPUTATION
INSTITUTIONAL FUNDING
HEDGE FUNDS
PUBLIC FUNDING
REWARD BASED
CROWDFUNDING

STARTUP FINANCING CYCLE (WHAT DO YOU PITCH)
TRACK RECORD
PATENT APPLICATION
TRACTION
RETENTION
DATA, DATA, DATA
INSTITUTIONAL FUNDING
HEDGE FUNDS
PUBLIC FUNDING
PUBLIC FUNDING

STARTUP FINANCING CYCLE (MODEL)
DIFFERENT TYPES OF CROWDFUNDING

Please keep in mind:
Don't overpromise and
underdeliver!
EXAMPLES?

EXECUTIVE EDUCATION
THE DIGITAL
WALLET OF THE CROWD

Crowdfunding is the
accumulation of small
investments in individual
projects by
a large number of individuals
(“the “crowd”) with the help
of the internet or social
networks (De Buyer et al.,
2012)
DEFINITION:

CURRENT TYPES OF CROWDFUNDING
DONATIONBASEDCROWDFUNDING
REWARDBASED CROWDFUNDING
LENDINGBASEDCROWDFUNDING
REALESTATECROWDFUNDING
C2B/B2B LENDING
CROWDFUNDING
EQUITYBASED CROWDFUNDING

YOU BACK UP
PROJECT AND
EXPECT NOTHING
IN RETURN.
DONATION REAL ESTATE
COLLECTS
FUNDING FOR
CONSTRUCTION
OF A REAL ESTATE
EQUITY
PARTIES ARE
BUYING SHARES
FROM A LTD.
(AB IN SWEDEN)
CROWD BACKS
UP A PROJECT
AND EXPECTS
A REWARD IN
RETURN.
PLATFORM
FACILITATES
LENDING BETWEEN
DIFFERENT
PARTIES
PARTIES ARE
SEEKING
FUNDING USING
THE
PLATFORM
REWARD LENDING C2C / C2B / B2B LENDING

YOU BACK UP
PROJECT AND
EXPECT NOTHING
IN RETURN.
DONATION REAL ESTATE
COLLECTS
FUNDING FOR
CONSTRUCTION
OF A REAL ESTATE
EQUITY
PARTIES ARE
BUYING SHARES
FROM A LTD.
(AB IN SWEDEN)
CROWD BACKS
UP A PROJECT
AND EXPECTS
A REWARD IN
RETURN.
PLATFORM
FACILITATES
LENDING BETWEEN
DIFFERENT
PARTIES
PARTIES ARE
SEEKING
FUNDING USING
THE
PLATFORM
REWARD LENDING C2B / C2B / B2B LENDING

STOCKHOLM
SCHOOL OF ECONOMICS
Stockholm is second only to Silicon Valley,
in the list of regions with the
most billion dollar-valued companies
per capita
SOURCE: CHASING THE UNICORN, A STUDY OF STOCKHOLM MISTY
MEADOWS, STOCKHOLM SCHOOL OF ECONOMICS, 2016
DOWNLOAD FULL REPORT HERE
RESULTS IN 2015

Individual
customer HIPS
HIPS
HIPSAdvaaH
iTransa
CLARIFYING THE BLURRY LINES OF FINTECH
GREATER STOCKHOLM AREA - Q4 2017
Stockholm FinTech Report 2017
Author: Michal Gromek, Stockholm School of Economics
Graphics: Adam Strandberg, Fintech Hub
In cooperation with:
Broker
Long-term
Care
InsuranceLifeInsurance
Insurance
Brokerage/Advisory
HealthInsurance
Broker
Consumer Lending
Crowdfunding
Mortgage Lending
Crow
dfunding
Equity
DebtInvestment
ExecutionOnly
InvestmentAdvisory
Marketplace
PrivateEquity
Robo-Advisory
Savings
Accounts
Bill Payment
Cryptocurrency
Domestic Transfer
International Transfer
Transaction
Accounts
Crowdfunding
DisabilityInsurance
WEALTH & CASH MANAGEMENT
CAPITAL,DEBTANDEQUITY
PAYMENTS&TRANSFERS
INSURTECH
PROPOSED PRIMARY FINTECH
COMPANIES FACING INDIVIDUALS
Neonet

Corporate
customer
HIPS
Kachi gn
stoEr
CLARIFYING THE BLURRY LINES OF FINTECH
GREATER STOCKHOLM AREA - Q4 2017
PROPOSED PRIMARY FINTECH
COMPANIES FACING CORPORATES
Stockholm FinTech Report 2017
Author: Michal Gromek, Stockholm School of Economics
Graphics: Adam Strandberg, Fintech Hub
In cooperation with:
Corporate Finance
Consumer Acquisition
Back-end
Clearing Technology
Hedging
Trading
System
s
PropertyandCasualtyInsurance
Long-term
CareInsurance
LifeInsurance
Insurance
Brokerage/Advisory
Crowdfunding - Debt
Crowdfunding - Equity
Crowdfunding - Real Estate
Prim
ary M
arket Equity
Factoring/InvoiceTrading
ForeignExchange
InvestmentManagement
LiquidityManagement
PortfolioManagement
RiskManagement
Savings
SecondaryMarketEquity
TradeFinance
Accounts
Payable
Accounts Receivable
Customer Acquisition
Hardware
Technology
Payment Method
Salary Paym
ents
Paym
ent Service Provider
Transaction
Accounts
Crowdfunding
CustomerAcquisition
DisabilityInsurance
HealthInsurance
WEALTH & CASH MANAGEMENT
CAPITAL,DEBTANDEQUITY
PAYMENTS&TRANSFERS
INSURTECH
TRADING
AND
EXC
H
A
N
GE
AdvaaH
Neonet
Neonet

0
10
20
30
40
50
Item 1 Item 2 Item 3 Item 4 Item 5
STOCKHOLM PATHWAY TO COMPLEX FINTECH
PAYMENTS
EQUITY
COMPLEXITY
VALUE
ROBOADVISORY
LENDING
INT. TRANSFER
WEALTH
MANAGEMENT
BLOCKCHAIN
BASED
INSURTECH
REGTECH
GDPR & PSD2
BLOCKCHAIN
BEYOND
BANKING
INITIAL COIN
OFFERING
(ICO)
PAYMENT
OF THINGS
(POT)
TODAY

STOCKHOLM
SCHOOL OF ECONOMICS
Expectation of the FinTech companies
Source: http://podroze.onet.pl/na-weekend/zamek-w-
malborku-krzyzacka-warownia-na-pomorzu/cvcm5
#FUNDING
#REGULATION
#INVESTORS
#EDUCATION

STOCKHOLM
SCHOOL OF ECONOMICS
Reality of the dedicated FinTech support (oversimplified)
by 2015
Source: http://podroze.onet.pl/na-weekend/zamek-w-
malborku-krzyzacka-warownia-na-pomorzu/cvcm5
WHO IS
RESPONSIBLE?
WORKING IN
SILOS

BUILDING A TRUST-
DRIVEN FINTECH
UNICORN

MICHAL GROMEK
#SE.LINKEDIN.COM/IN/MGROMEK
STOCKHOLM SCHOOL OF ECONOMICS
EXECUTIVE EDUCATION
INTRODUCTION SESSION
ON BUILDING TRUST IN YOUR VENTURES
FEBRUARY 6TH 2019
Source: https://digitalready.co/
blog/online-reputation-management-tools-and-best-practices

EXECUTIVE EDUCATION
PLEASE STAND UP

EXECUTIVE EDUCATION
PLEASE SIT DOWN IN CASE YOU
HAVE NEVER DONE AN ONLINE
BANK TRANSFER TO SOMEBODY
ELSE.

EXECUTIVE EDUCATION
HAVE NEVER DONE A
TRANSACTION OF A MULTISIDED
PLATFORM LIKE: AMAZON, EBAY,
TRADERA, UBER

EXECUTIVE EDUCATION
HAVE NEVER TRAVELLED WITH
AIRBNB.

EXECUTIVE EDUCATION
DON'T OWN ANY OUT OF 1525
TYPES OF CRYPTOCURRENCIES
(LIKE BITCOIN, ETHEREUM,
RIPPLE)

EXECUTIVE EDUCATION
THE ADOPTION OF TECHNOLOGY
IS UNIQUE FOR EACH SUBSECTION OF
FINTECH.
= TRUST HAS A SIGNIFICANT IMPACT.

EXECUTIVE EDUCATION
THE ADOPTION OF TECHNOLOGY
IS UNIQUE FOR EACH SUBSECTION OF
FINTECH.
= TRUST HAS A SIGNIFICANT IMPACT.
high trust level
time

REWARD BASED CROWDFUNDING
REWARD
IDEA
THERE IS A
CONNECTION TO
THE CROWD
THE
ENTREPRENEUR
S TEAMS TRUST
AVERAGE FUNDING ROUND: LESS THAN 9.5K EURO

REWARD BASED CROWDFUNDING
C2B / C2B / B2B LENDING
Source: https://www.fundedbyme.com/en/campaign/1061/flippin-burgers/?p=v2 (Accessed 5th of February 2017)

EQUITY BASED CROWDFUNDING
REWARD
EQUITY
THERE IS A LTD
COMPANY
THERE IS A
VALUATION
TRUST /
REPUTATION
WHAT IS THE EXIT
STRATEGY?
AVERAGE FUNDING ROUND ON ONE OF SE PLATFORMS - 65K EURO
SOURCE: https://www.fundedbyme.com/(accessed5.2.2017,note:justasindicatorasnotallofthecompanieshavebeenequitycampaigns)

EQUITY BASED CROWDFUNDING
Source: https://www.fundedbyme.com/en/campaign/1061/flippin-burgers/?p=v2 (Accessed 5th of February 2017)
Source: https://www.fundedbyme.com/en/campaign/7707/the-fox/?type=e&p=v2 (ACCESSED 05.02.2017)

CROWDLENDING (C2B / P2P LENDING)
REWARD
EQUITY
LENDING
COMPANY
EXISTS FOR AT
LEAST 18
MONTHS
TRACK RECORD
COLLATERALS
AVERAGE LOAN SIZE (UK) 170K EURO, INVESTORS PORTFOLIO 20K EURO
SOURCE: HTTPS://WWW.FUNDINGCIRCLE.S/BLOG/PRESS/(ACCESSED05.02.2017)

CROWDLENDING
Source:https://toborrow.se/sv/projekt/respice-sweden-ab-2/ (Accessed 5th of February 2017)

CAPITAL C - NOT ONLY FUNDING
AMBASSADORS
DOOR OPENERS
FREE PR
FANS
INFORMAL
NETWORK
TEST GROUP

WHAT MOTIVATES USERS
SOURCE: PROF KARIM LAKHANI, OPEN INNOVATION HOW CAN I USE THE CROWD, ESBRI 26.02.106
PICTURE: HTTP://BLOG.CROWDS.IO/WP-CONTENT/UPLOADS/2015/07/CROWDSOURCING-COMMUNITY-750X410.JPG
3.
PHILANTROPHY EXTERNAL
2.
(EXTRINSIC)
1.
INTRINSIC
(INTERNAL)

SHORT SUMMARY
VENTURE FUNDING IS NOT ONLY ABOUT
FUNDING BY PRIMARY ABOUT ADDITIONAL
NON-FINANCIAL BENEFITS.
CANNED SOLUTIONS DON'T EXIST AS EACH
VENTURE HAS DIFFERENT CHALLENGES
REFLECT ON YOUR NEEDS AND MATCH INVESTOR
TYPE.
CROWDFUNDING IS AN OLD PHENOMENON.
DIFFERENT TYPES OF CROWDFUNDING MATCH
DIFFERENT DEVELOPMENT STAGES.
IT PROVIDES A RANGE OF NON-
FINANCIAL BENEFITS TO COMPANIES.

HOW DO YOU
CHOOSE A
RESTAURANT
IN ITALY?

STOCKHOLM
SCHOOL OF ECONOMICS
1. YOU WOULD LIKE TO BUY FOUR TYERS FOR YOUR CAR - ONLINE.
2. YOU HAVE FOUND THE PRODUCER AND MODEL OF YOUR
3. CHOICE. ON A PRICE COMPERING WEBSITE.
4. YOU FIND SEVERAL WEBSHOPS WHICH OFFER THE SAME
PRICING, DELIVERY TIME AND PAYMENT METHOD
WHAT ARE THREE MAIN POINTS, HOW YOU
CHOOSE FROM WHICH WEBSHOP DO YOUR BUY?
INDIVIDUALLY. ONE MINUTE

STOCKHOLM
SCHOOL OF ECONOMICS
WE TEND TO VISIT
CROWDFUNDED OR
KNOWN RESTAURANTS
INSTEAD OF NEW PLACE
WHY DO THINK THAT THIS IS THE
CASE?

STOCKHOLM
SCHOOL OF ECONOMICS
THIS PLACE MUST BE SAFE TO BUY FROM.
THERE ARE LOTS OF PEOPLE WHO HAVE
ASSESSED THIS STORE AND CONCLUDED
THAT IT'S A GOOD STORE TO BUY FROM.
THE DEALS IN THIS STORE MUST BE
PRETTY GOOD BECAUSE LOTS OF PEOPLE
ARE BUYING, AND THEY WOULDN'T BE
BUYING IF THE DEALS WEREN'T GREAT.
SOURCE:
HTTPS://WWW.FASTCOMPANY.COM/3016506/DIALE
D/THE-SECRET-POWER-BEHIND-WHY-WE-PICK-
BUSY-RESTAURANTS-OVER-EMPTY-ONES

STOCKHOLM
SCHOOL OF ECONOMICS
SHARE YOUR RESULT WITH 4 OF
YOUR NEIGHBOURS.
SUMMARIZE YOUR MOST IMPORTANT
CONCLUSIONS INTO
ONE SENTENCE.
(4 MINUTES)

STOCKHOLM
SCHOOL OF ECONOMICS
THE POWER
OF SOCIAL PROOF?
SOMETIMES REFERRED TO AS
WISDOM OF THE CROWD.
BEHAVIOUR ECONOMICS:
HEURISTICS ARE SIMPLE, EFFICIENT
RULES WHICH PEOPLE OFTEN USE
TO FORM JUDGMENTS AND MAKE
DECISIONS. THEY ARE MENTAL
SHORTCUTS THAT USUALLY
INVOLVE FOCUSING ON ONE
ASPECT OF A COMPLEX PROBLEM
AND IGNORING OTHERS.

EXECUTIVE EDUCATION
OBJECTIVE FOR THIS SUBSECTION
> SHIFT TOWARDS DISTRIBUTED OF TRUST
> IMPACT ON YOUR VENTURES
> HANDS ON TOOL TO GAIN FROM THIS PROCESS

STOCKHOLM SCHOOL OF
ECONOMICS EXECUTIVE EDUCATION
SHIFT OF TRUST FROM VERTICAL TO HORIZONTAL
AUTHORITY / ELITES / EXPERTS DECENTRALISED TRUST
FRIENDS
PAGE WITH REVIEWS
VLOGER
SOCIAL MEDIA

ORIGINS OF TRUST
EXECUTIVE EDUCATION
LOCAL TRUST
(RURAL ORIGIN)
INSTITUTIONAL
TRUST
INFRASTRUCTURE /
ITEMS /
DECENTRALISED

PHONE CHALLENGE
STOCKHOLM
SCHOOL OF ECONOMICS
EXECUTIVE EDUCATION
ADOPTED FROM R.BOTSMAN
PLEASE TAKE OUT YOUR PHONE
AND UNLOCK IT.

PHONE CHALLENGE
STOCKHOLM
SCHOOL OF ECONOMICS
EXECUTIVE EDUCATION
PLEASE TAKE OUT YOUR PHONE
AND UNLOCK IT.
PLEASE EXCHANGE IT WITH THE
PERSON SITTING NEXT TO YOU
(UNLOCKED) FOR 20 SEC.
YOU CAN DO WHATEVER YOU WANT
ON THIS PHONE FOR 20 SEC.

WHAT HAPPENED IS CALLED
A "TRUSTLEAP".
STOCKHOLM
SCHOOL OF ECONOMICS
Some companies have
breached our trust.
Do you remember how
and if they decided
to fix it?

WHAT HAPPENED IS CALLED
A "TRUSTLEAP".
STOCKHOLM
SCHOOL OF ECONOMICS
In case the "new user" of the
Phone would breach the initial
trust there are following tools
to fix it:
Lack of accountability
Responsiveness
Ownership
Empathy
Human impact
Accountability

BUSINESS & TRUST
EXECUTIVE EDUCATION
E-COMMERCE
MULTISIDED
PLATFORM
COMMUNITY

ONLINE TRUST
EXECUTIVE EDUCATION
FIRST WAVE:
SHARING
COMMUNICATION
SECOND WAVE:
TRANSACTIONAL
(EBAY)
THIRD WAVE:
MULTILEVEL
(EXPERIENCE)

ONLINE CURRENCIES
STOCKHOLM
SCHOOL OF ECONOMICS
EXECUTIVE EDUCATION
MONEY IS THE CURRENCY
OF TRANSACTIONS
TRUST IS THE CURRENCY
OF INTERACTIONS

SHARING ECONOMY:
STOCKHOLM
SCHOOL OF ECONOMICS
“PEOPLE GENERALLY ARE MORE
COMFORTABLE
MEETING NEW PEOPLE USING
TECHNOLOGY.”
SOURCE: THE ECONOMIST, ALL EYES ON THE SHARING ECONOMY (MAR. 9, 2013),
HTTP://WWW.ECONOMIST.COM/NEWS/TECHNOLOGYQUARTERLY/21572914-COLLABORATIVE-CONSUMPTION-
TECHNOLOGY-MAKES-IT-EASIER-PEOPLE-RENT-ITEMS

TRUST TOWARDS A PLATFORM
- PRESS BRANDING
STOCKHOLM
SCHOOL OF ECONOMICS
SOURCE: HTTP://WWW.FILIPETRABBOLD.COM.BR/

TRUST TOWARDS A PLATFORM -
CUSTOMER REVIEWS
STOCKHOLM
SCHOOL OF ECONOMICS
SOURCE: CARSPRING.CO.UK > TRUSTPILOT / OPINEO.PL

TRUST TOWARDS A PLATFORM -
AWARDS, CERTIFICATES
STOCKHOLM
SCHOOL OF ECONOMICS
SOURCE: HTTP://WWW.ONLINE-KREDITE.COM/
CREDITPLUS-KREDIT.HTML
SOURCE: OWN CREATION
WIFI PIE
DOWNLOAD OUR WIFI PIE
DATA PROTECTED BY TUV
www.wifipie.com

LOG IN: LIMIT MISBEHAVIOUR
IN YOUR COMMUNITY
STOCKHOLM
SCHOOL OF ECONOMICS
SOURCE: HTTP://DEMO.VERIDU.COM/PAYMENTS/

INCREASE TRUST FOR PLATFORMS.
> LIMIT MISBEHAVIOUR IN YOUR
COMMUNITY
> UNDERSTAND HOW USERS
COMMUNICATE BETWEEN
EACH OTHER
> HELP THEM
STOCKHOLM
SCHOOL OF ECONOMICS

BEGINNING:
STAR RATING
STOCKHOLM
SCHOOL OF ECONOMICS
SOURCE: DCCOINSANDCOLLECTIBLES.COM/REVIEWS-AND-RATINGS/ (EBAY SELLER)

REVIEW AS CURRENCY:
"... RATING DROPS BELOW 4.6. (...) IF
YOUR RATINGS CONTINUE TO STAY
LOW, YOU’LL BE DEACTIVATED."
STOCKHOLM
SCHOOL OF ECONOMICS
SOURCE: /WWW.RIDESHARINGDRIVER.COM
/FIRED-UBER-DRIVERS-GET-DEACTIVATED-
AND-REACTIVATED/

REVIEW SYSTEMS
STOCKHOLM
SCHOOL OF ECONOMICS
SOURCE: BENEDICTE DAMBRINE, USER
REPUTATION, BUILDING TRUST AND
ADDRESSING PRIVACY ISSUES IN THE
SHARING ECONOMY, FUTURE OF PRIVACY
FORUM, JUNE 2015
"You have three facebook friends
in common between the car
owner and yourself"

REPUTATION AS
CURRENCY?
DARKMIRROR
SEASON 3.01
NOSEDIVE
STOCKHOLM
SCHOOL OF ECONOMICS

HELP YOUR USERS - AIRBNB
STOCKHOLM
SCHOOL OF ECONOMICS
SOURCE: JOE GEBBIA: HOW AIRBNB DESIGNED FOR TRUST,
HTTPS://WWW.TED.COM/TALKS/JOE_GEBBIA_HOW_AIRBNB_DESIGNS_FOR_TRUST?LANGUAGE=EN

STOCKHOLM
SCHOOL OF ECONOMICS
BONUS SLIDES
WHAT IS THE DIFFERENCE BETWEEN:
REPUTATION?
IMAGE?
IDENTITY?

BONUS SLIDES
WHAT IS THE DIFFERENCE BETWEEN:
EXPERIENCE
IDEA HOW
SOMETHING MIGHT BE
MOSTLY GRAPHIC IDENTITY,
CHOSEN COLOURS ETC.
REPUTATION?
ASPECTSOFTRUST
IMAGE?
IDENTITY?
CV

IT IS IMPORTANT FOR YOUR STARTUP
BECAUSE:
STOCKHOLM
SCHOOL OF ECONOMICS
VALUE OF NON-FINANCIAL ASPECTS OF A VALUATION
(REPUTATION + INTELLECTUAL PROPERTY)* - GOOGLE
84%, APPLE 87%**
STOPS THE COMPETITION FROM ENTERING THE
MARKET***
YOU HELP THEIRS CUSTOMERS TO HELP THEM
SUCCEED :)
SOURCE:
* TOMASZ J. DABKOWSKI, REPUTACJA PRZEDSIEBIORSTWA, OFFICYNA, CRAKOW 2010, P.32-P.33
** M PORTER, STRATEGIA KONKURENCJI, METODY ANALIZY SEKTORÓW I KONKURENTÓW, PAŃSTWOWE WYDAWNICTWO
EKONOMICZNE, WARSZAWA 1994, S.25

"TRUST IS TRANSLATABLE TO
REPUTATION AND
REPUTATION UNLOCKS A
NEW POWER OF YOURSELF
IN THE COMMUNITY" -
RACHEL BOTSMAN
STOCKHOLM
SCHOOL OF ECONOMICS

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