2. WHAT KIND OF RETURN DO YOU SEEK & PROMISE?
High risk & high return
Blue Ocean,
new product /
service
Easier to get
funding from Angel
or VC
Our focus
Low risk & low return
Competitive,
established
market
Easier to get
funding from
banks
Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
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3. Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
4. Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
5. RECENT IPO VALUATIONS OF TECH STARTUPS
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6. VENTURE CAPITAL PER REGION IN THE USA
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7. CONSOLIDATION & STEADY MONEY FLOW SINCE 2002
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8. WHAT TO EXPECT FROM INVESTORS?
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9. FRIENDS AND FAMILY
Focus on you being happy and productive.
They don’t have financial expectation, but expectation that
you do not quit very soon, and when you do, you have a good
reason to do so. And that you don’t ask for more funding.
Asks:
- Commitment from your side to this idea.
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10. GOVERNMENT / FOUNDATION GRANTS
Focus on story telling value and making sure they are safe.
They don’t have financial expectation, but expectation that
you do not close in next 2 years, and help them with storytelling
Asks:
- Great story of why
- Good presentation,
- Ensure formal requirements are obviously met – no risk of
losing job for the bureaucrat.
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11. ANGEL INVESTORS
Focus on personal interest and return
Angels pick startups in their areas of interest and knowledge.
They are a bit like your team, they help expand by making
new connections. Right set of angels can help you go far
Asks:
- Great team, meaning personal click and trust
- Idea is within their personal means and interests
- 5-30% of shares for typically $50-500k
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12. VENTURE CAPITALISTS
Focus on return
VCs think that 1 out of 10 investments will succeed. And that
one will bring home enough cash to cover all the costs AND a
20% + annual return. Is not interested in getting too deeply
involved with management/control.
Asks:
- Great team, meaning performing, proven team
- Idea is within organizational strategic focus area (ie, B2B,
social media, mobile, games, etc)
- 15-30% of shares for typically $500-5m for Series A
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13. BANKS, FINANCIAL INSTITUTIONS
Focus on potential loss.
They have fixed return expectation (5-10% per annum), thus
they focus on minimizing risk of loss.
Asks:
- Existing income / P&L
- Company assets as collateral
- Cofounder personal commitment
- Others’ assets as collateral
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14. TAKE A LOOK INTO THE FUNDING / PAYOUT CALCULATOR
https://www.smartasset.com/infographic/startup
Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
15. ASSINGMENT #9
• Describe 2 persons you’d like to
partner up / work with you
• Describe your ideal investor, and the
amount of investment you want for a
stake in the company
Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
16. TEAM MEMBER DESCRIPTION
Responsibilities.
Define:
Describe role, ensure
expectations are
aligned.
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•
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•
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•
•
People with corporate
background, mngmt
consulting, etc:
BEWARE – THEY MAY BE
EXPECTING STHING ELSE
Salary
Benefits
Vacation
Hours
How to get in contact
Working mode
Notice period
Expenses (computer,
phone, lunches, travel, ..)
Candidate profile
Profile of the ideal
candidate.
Make a scoring of the
candidate against the
ideal candidate.
Take hiring serious.
Take hiring seriously. Hire slow, fire fast. Make sure to put things on paper from
the outset.
Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
17. INVESTOR DESCRIPTION
Ideal Profile.
Define:
Other enquiries
Connections and
experience in industries,
or roles. Tech startups,
retail, music, supply
chain, etc etc
• Amount of investment
• Stake in the company
• Level of control (board
member?)
Help with what?
- New investors
- Finding customers
- Growing team
- New branch
- …
Location, education,
culture.
You’ll be married to the people who invest in the company – so, be careful,
it’s not just getting some money in.
Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
18. ASSIGNMENT #10: BUSINESS PLAN
•
•
•
•
•
•
•
•
•
•
Problem (~1page)
Solution (1-2 pages)
Market (~1 page)
Unique Value Proposition / competitive edge (~1 page)
Go to market strategy (~1 page)
Existing customers, partnerships (if any)
Journey summary – what happened so far (~1 page)
Next steps (~1 page)
Team (members, investors) (1-2 pages)
Appendix – Financial expectations (1 page)
No less then 7, no more then 10 pages. Use shapes, graphs.
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