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    Presentation on Entrepreneurship.ppt Presentation on Entrepreneurship.ppt Presentation Transcript

    • Agenda
      • LeftHand Networks
      • Small Business
      • Entrepreneurialism
        • Are you an Entrepreneur?
        • Learning from other’s mistakes
      • The Business Plan
      • Capitalizing a Business
      • Resources for Entrepreneurs
      • Closing Comments
    • My Story
      • CSU-ME 1984
      • Worked for 3 technology companies in the storage industry over a 15 year span
      • The Vision
      • Late nights at the Holiday Inn
      • The Business Plan
      • 7 guys in a basement
      • Garage Technology Ventures
      • Raised $500,000 from angel investors
      • Blastoff!
    • LeftHand Networks Today
      • Headquarters - Boulder, CO
        • 176 employees
      • Delivering full-featured SANs via Ethernet
      • Market leader in IP SAN Storage segment
          • 5000+ Installations
          • 2000+ Customers
          • 2 OEM partners
      • Three financing rounds – $75M total
      • SAN/iQ: patented, distributed, network storage operating system
    • Why start or work for a small company?
      • Small Companies (<500 employees)
      • Represent 99.7 percent of all employer firms.
      • Employ half of all private sector employees.
      • Pay 44.3 percent of total U.S. private payroll.
      • Have generated 60 to 80 percent of net new jobs annually over the last decade.
      • Create more than 50 percent of nonfarm private gross domestic product (GDP).
      • Produce 13 to 14 times more patents per employee than large patenting firms.
        • These patents are twice as likely as large firm patents to be among the one percent most cited.
      • Are employers of 39 percent of high tech workers (such as scientists, engineers, and computer workers).
      • Made up 97 percent of all identified exporters and produce 29 percent of the known export value.
      • Source Small Business Administration http://www.sba.gov
    • Are You an Entrepreneur?
      • Common traits of an Entrepreneur
      • Passion for what they do
        • They understand &quot;why“ they are doing it, and it motivates them.
      • Enjoyment of what they do - they love the journey, not just the results.
      • A risk-taker rather than a risk-avoider (carefully calculated, not wild risk)
      • A self-starter who needs little or no external stimulus (you don't need a boss to tell you what to do and when)
      • An indomitable will-to-win which transcends almost all possible adversities.
    • Common Entrepreneurial Mistakes
      • Mistake 1: Failing to spend enough time researching the business idea to see if it's viable.
        • 9 out of 10 businesses fail because their original concept is not viable.
        • Understand who your competition is
      • Mistake 2: Miscalculating market size, timing, ease of entry and potential market share.
        • Understanding the market dynamics and customer’s decision making progress
      • Mistake 3: Underestimating financial requirements and timing.
        • You can never raise too much money.
        • Unplanned spending will occur.
        • It takes the average venture backed startup 4 years to break even
    • Common Entrepreneurial Mistakes
      • Mistake 4: Seeking confirmation of your actions rather than seeking the truth.
        • Constantly bounce ideas off neutral, experienced people
        • Don’t think you know all the answers, because you don’t
      • Mistake 5: Overprojecting sales volume and timing.
        • It always takes longer than you think, especially in large markets where there is always alternative choices
        • The way customers think:
          • Is your company going to be here tomorrow?
          • Do you have global service & support?
          • Taking the risk with new technology that may not be fully baked
          • We have financing and purchasing agreements
      • Mistake 6: Lacking simplicity in your vision.
        • Many entrepreneurs go in too many directions at once and do not execute anything well.
    • The Most Important Parts of a Business Plan
      • Executive Summary (typically 1 page ~250 words)
        • Opening paragraph contains the “Elevator Pitch”
      • Investors may not look beyond this page
      • What is your “sustainable competitive advantage”?
      • Know your Target Market
        • Market segmentation
      • Your Team
        • Startup experience
        • Relevant industry experience
        • Management leadership experience
        • Track record
    • Capitalizing a Business
      • Self funded
      • Family, friends & founders
      • Borrow money
      • Venture Capital (my biggest learning curve)
    • Venture Capital Investments By Year 165% returns in 1999 2002-2003 – only period of negative ROI
    • Venture Capital Investments by Region
    • Venture Capital Investments by Sector
    • Choosing a VC
      • A big name isn’t everything
        • Often big exposure, but no help
        • Usually have strong industry relationships
      • One that can add value
        • Has the time to help with the business
        • Help in the local community with hiring, press relations and potential customers is invaluable.
      • “ Hand’s-off”, but very willing to help
      • Make sure they have experience making investments in similar markets
        • There is “dumb money” and “smart money”
      • Make sure they are committed for the long haul
        • Ask how much money they set aside for subsequent financing rounds.
    • Venture Capital
      • At the end of the day VCs only consider 3 things:
      • What problem are you solving?
      • What is your “unfair competitive advantage”?
        • Prove it by a detailed analysis of all the competition
        • Intellectual property - patentable ideas
        • Customer testimonials go a long way
      • How big is the addressable market?
        • Don’t do your own analyses
        • Use information from a credible research firm
      • Team experience
        • Relevant technical and business leadership experience
        • Battle scars are good
      • One page business plans often get funded
    • Business Incubators
      • What It Is: Business incubators are a good path to capital from angel investors, state governments, economic-development coalitions and other investors.
      • Business incubators house several businesses under one roof or in a campus setting, and offer resident companies reduced rents, shared services and, in many instances, formal or informal access financing.
      • Appropriate for: Pre-revenue-stage companies to early-stage companies that are selling products or services
      • Supply: Approximately 1,000 incubators in North America cater to high- and low-tech businesses. Of these, about 80 percent report that they provide formal or informal access to capital.
      • Cost: There are many kinds of financing found through incubators, from state-assistance funds based on matching private sector investments, which could be inexpensive relative to straight equity investments from angel investors.
      • Ease of Acquisition: Getting into an incubator can be easy or challenging. Simply being in an incubator offers value to investors. Incubator managers know this, and as a result, many carefully screen would-be tenants to see that they match certain criteria. The good news is that once in an incubator, the path to angels or other investors might be more direct since they tend to hover around easily identified centers of entrepreneurial activity.
    • CTEK ( www.ctek.org ) - Colorado
      • Over 800 registered executives, business professionals, and community leaders who have agreed to donate their time to help entrepreneurs strategize and decision-make
      • Angel network that is interested in investing capital in innovative companies
      • Partners offering discounted professional services to early stage companies
      • Introductions to key and specific people an entrepreneur requires
      • Monthly fee that is partially deferred
    • Techstars (www.techstars.org)
      • Seed funding for 5% of company
      • Advice & Mentoring from founders of local companies, local VCs and other business leaders.
        • Managing Director, Mobius Venture Capital
        • Jim Pollock, president of CTEK Boulder Venture Center
      • Connections to partners, customers & investors
      • Takes 10 companies each summer
    • Terms for Angel Funding
      • Many options
      • Typical terms:
        • Money is on loan terms with a nominal interest rate. The loan plus accrued interest converts to stock at whatever the A round terms become.
        • If the A round venture financing doesn’t occur within a specific time frame, the loan terms may continue, or converts to stock at a pre-specified price, or the investor loses his money with no obligation to the company.
    • Closing Comments
      • Being an Entrepreneur
      • If you're an entrepreneur, you're going to break new ground. A lot of people are going to say it's not possible. You can't accept that. A good entrepreneur is going to find a way.
      • You must “BELIEVE” in what you’re doing
      • Determination and persistence - Never give up!
      • Every business with a product that is shy of being miraculous takes a tremendous amount of work to be successful
      • Be prepared for a marathon, not a sprint
      • All who have accomplished great things have had a great aim, have fixed their gaze on a goal which was high, one which sometimes seemed impossible.&quot;
      • --Orison Swett Marden