Presentation on Entrepreneurship.pptPresentation Transcript
Are you an Entrepreneur?
Learning from other’s mistakes
The Business Plan
Capitalizing a Business
Resources for Entrepreneurs
Worked for 3 technology companies in the storage industry over a 15 year span
Late nights at the Holiday Inn
The Business Plan
7 guys in a basement
Garage Technology Ventures
Raised $500,000 from angel investors
LeftHand Networks Today
Headquarters - Boulder, CO
Delivering full-featured SANs via Ethernet
Market leader in IP SAN Storage segment
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 "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
Relevant industry experience
Management leadership experience
Capitalizing a Business
Family, friends & founders
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.
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
Relevant technical and business leadership experience
Battle scars are good
One page business plans often get funded
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
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
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.
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."