Entrepreneurship & Capital:           the Engines that Power an               Economy ForwardIntro note from Nastas. This ...
Entrepreneurship & Capital:      the Engines that Power an          Economy Forward                  Thomas D. Nastas     ...
Entrepreneurship & $        The Joy of Entrepreneurshiphttp://www.youtube.com/watch?v=T6MhAwQ64c0&            feature=play...
Entrepreneurship & $Entrepreneurship & $: The Engines that Power            an Economy Forward           MIA: take your mo...
www.IVIpe.comInfo@IVIpe.com
Topic #1: Entrepreneurship         www.IVIpe.com         Info@IVIpe.com
Topic #2: History of VC        www.IVIpe.com        Info@IVIpe.com
Topic #3: VC in the World         www.IVIpe.com         Info@IVIpe.com
Topic #4: How Venture    Capital Works       www.IVIpe.com       Info@IVIpe.com
Topic #1: Entrepreneurship    Test: Knowledge of Entrepreneurshiphttp://yalepress.yale.edu/yupbooks/entrepren             ...
Topic #1: Entrepreneurship   What is Entrepreneurship? How can/should it be defined?            www.IVIpe.com            I...
Topic #1: Entrepreneurship           What is Entrepreneurship?•   It’s a process•   High uncertainty, many start-ups    ha...
Topic #1: Entrepreneurship• Requires determination & perseverance  since nothing goes to plan• Live with uncertainty, isol...
Topic #1: EntrepreneurshipTraits & Characteristics of Entrepreneurs•   Passion vs. Money?•   Realize Goals vs. Make Dreams...
Topic #1: Entrepreneurship        Passion vs. Money?• Motivation is to improve things, solve  an existing problem, create ...
Topic #1: Entrepreneurship   Realize Goals vs. Dreamers?• Cannot reach their goals through other  means• As they implement...
Topic #1: Entrepreneurship           Born or Made?• A little of both• Combination of following instincts &  an environment...
Topic #1: Entrepreneurship            Control vs. Letting Go•   Have control & not at the same time.•   Adaptable since wh...
Topic #1: Entrepreneurship          Planning vs. Execution•   Attitude & energy for action•   Have a general idea of the d...
Entrepreneur’s Work Philosophy          www.IVIpe.com          Info@IVIpe.com
Topic #2: History of VC        www.IVIpe.com        Info@IVIpe.com
Topic #2: History of VC        www.IVIpe.com        Info@IVIpe.com
Topic #2: History of VC                         Invested $70k (1957)                         ROI: $377MM (1968)           ...
Topic #2: History of VC   1969: Pension Fund Reform        www.IVIpe.com        Info@IVIpe.com
Topic #2: History of VC                         Invested $57k (1978)                          ROI: $14MM (1981)           ...
Topic #3: VC in the World         www.IVIpe.com         Info@IVIpe.com
Topic #3: VC in the WorldInternet & New Economy Business Models   • 1999 Vintage Funds Returned 150%   • Momentum & Greed ...
Topic #4: How Venture    Capital Works       www.IVIpe.com       Info@IVIpe.com
Topic #4: How Venture    Capital Works       www.IVIpe.com       Info@IVIpe.com
$ Flows into VC    www.IVIpe.com    Info@IVIpe.com
Liquidity vs. Profits      www.IVIpe.com      Info@IVIpe.com
Risk & Return   www.IVIpe.com   Info@IVIpe.com
Topic #4: How Venture             Capital Works   The Reality (Business) of VC (How it                 Works)Equity is a G...
Topic #4: How Venture              Capital Works ProbabilityIndividual Event                             80%  Company has ...
Topic #4: How Venture    Capital Works       www.IVIpe.com       Info@IVIpe.com
Topic #4: How Venture           Capital Works      Requirements to Receive VC1. Large addressable market or defined niche2...
Topic #4: How Venture           Capital Works     Value-Added of VC (Beside $$)1. Sometimes Create the Deal2. Raise New $$...
Topic #4: How Venture           Capital Works         VC & PE in CIS & Russia1. Two major investors EBRD & US Gov’t2. Ente...
Topic #4: How Venture            Capital Works              VC to PE in Russia Today1. 1st in VC (1994-1999). Deals w/VC  ...
Topic #4: How Venture           Capital Works    Emerging Interest in Tech-Russia1. Intel Capital, AddVenture, etc.2. One-...
Topic #4: How Venture            Capital Works  Why Little €/$ Goes to Russian Tech1. Capital Seeks the Highest Rate of Re...
Topic #4: How Venture         Capital Works    Most Tech Opts in Int’l MktsWhere Demand Is      ButGaining Access is Expen...
Topic #4: How Venture       Capital Works  Most Tech Opts in Int’l Mkts Where Demand Is Gaining Access is Expensive Penetr...
Topic #4: How Venture             Capital WorksFACT: Russia Has Good Ideas: Ideas ≠ Deals1/200 SMEs seeking VC get €/$: Wh...
Topic #4: How Venture    Capital Works What’s Common Here?       www.IVIpe.com       Info@IVIpe.com
Topic #4: How Venture              Capital Works                  SummaryEntrepreneurship & VC are linkedVC only successfu...
Where is the Technology?
Technology In Many Places!                 Just Look & DefineSlaughter                     Raising                 Genetic...
Thomas D. Nastas                    Tom@IVIpe.com                    www.IVIpe.com                 Tel. +7.985.923.4727   ...
Case Study Discussion &            Analysis: HotmailWhat are objectives (implicit/explicit)?What decisions (implicit/expli...
Case Study Discussion &          Analysis: Hotmail• Does the opportunity fit Hotmail’s core  competencies?• Did they think...
Case Study Discussion &          Analysis: Hotmail•   What was their value creation model?•   Did they create value? For w...
Case Study Discussion &         Analysis: Hotmail• What changes do customers need to make  to use the service?• How did ‘p...
Case Study Discussion &              Analysis: HotmailWhat evidence do I have to help make the decision?Is the evidence re...
Case Study Questions to Ask               YourselfWhat action should I take?How should I convince others in the case & the...
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Entrepreneurship & Capital, Engines that Power an Economy Forward, Nastas Presentation in Kazan Russia

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Entrepreneurship & Capital, Engines that Power an Economy Forward, Nastas Presentation in Kazan Russia

  1. 1. Entrepreneurship & Capital: the Engines that Power an Economy ForwardIntro note from Nastas. This presentation is the lead presentation in my MasterClass, ‘Scaling Up Entrepreneurship,’ delivered in Croatia, Kazakhstan & Russia.Modules of the Master Class were presented to staff of the World Bank at their‘Human Capital & Entrepreneurship’ conference .You can view the outline of the Master Class at http://www.slideshare.net/TomNastas/ivi-program-scaling-up-entrepreneurship-progam-description & the calendar of topics, day/time at this link,http://www.slideshare.net/TomNastas/schedule-ivi-program-scaling-up-entrepreneurship-englishThis presentation was delivered in Kazan, Russia, 27 October 2010, to members ofthe Kazan innovation, investment and entrepreneurship community, with regionalGovernment officials attending from the Presidential Administration, Ministries ofScience, Education & Finance.Comments, questions are welcome; please contact me at Tom@IVIpe.com www.IVIpe.com Info@IVIpe.com
  2. 2. Entrepreneurship & Capital: the Engines that Power an Economy Forward Thomas D. Nastas 27 October 2011 Kazan, Russia Tom@IVIpe.com www.scalingupinnovation.com www.IVIpe.com Tel. +1.517.899.1432Innovative Ventures Inc. Haslett, MI. USA www.IVIpe.com Info@IVIpe.com
  3. 3. Entrepreneurship & $ The Joy of Entrepreneurshiphttp://www.youtube.com/watch?v=T6MhAwQ64c0& feature=player_embedded www.IVIpe.com Info@IVIpe.com
  4. 4. Entrepreneurship & $Entrepreneurship & $: The Engines that Power an Economy Forward MIA: take your moneyhttp://www.youtube.com/watch?v=7sei-eEjy4g www.IVIpe.com Info@IVIpe.com
  5. 5. www.IVIpe.comInfo@IVIpe.com
  6. 6. Topic #1: Entrepreneurship www.IVIpe.com Info@IVIpe.com
  7. 7. Topic #2: History of VC www.IVIpe.com Info@IVIpe.com
  8. 8. Topic #3: VC in the World www.IVIpe.com Info@IVIpe.com
  9. 9. Topic #4: How Venture Capital Works www.IVIpe.com Info@IVIpe.com
  10. 10. Topic #1: Entrepreneurship Test: Knowledge of Entrepreneurshiphttp://yalepress.yale.edu/yupbooks/entrepren eurshipquiz.asp www.IVIpe.com Info@IVIpe.com
  11. 11. Topic #1: Entrepreneurship What is Entrepreneurship? How can/should it be defined? www.IVIpe.com Info@IVIpe.com
  12. 12. Topic #1: Entrepreneurship What is Entrepreneurship?• It’s a process• High uncertainty, many start-ups happen by accident• A means for people (dreamers?) to achieve their goals• To create something where it did not exist before, to create some good, to fix something broken www.IVIpe.com Info@IVIpe.com
  13. 13. Topic #1: Entrepreneurship• Requires determination & perseverance since nothing goes to plan• Live with uncertainty, isolation, lack of progress, most of all, rejection “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.” www.IVIpe.com Info@IVIpe.com
  14. 14. Topic #1: EntrepreneurshipTraits & Characteristics of Entrepreneurs• Passion vs. Money?• Realize Goals vs. Make Dreams Come True?• Born or Made?• Control vs. Letting Go• Planning vs. Execution www.IVIpe.com Info@IVIpe.com
  15. 15. Topic #1: Entrepreneurship Passion vs. Money?• Motivation is to improve things, solve an existing problem, create some good• Get rich as a result of the passion• Wanting to be rich doesn’t create the passion www.IVIpe.com Info@IVIpe.com
  16. 16. Topic #1: Entrepreneurship Realize Goals vs. Dreamers?• Cannot reach their goals through other means• As they implement, they have the feeling, the hunch that this thing might be bigger than they imagined• Create products and services that create new markets www.IVIpe.com Info@IVIpe.com
  17. 17. Topic #1: Entrepreneurship Born or Made?• A little of both• Combination of following instincts & an environment that developed their talents www.IVIpe.com Info@IVIpe.com
  18. 18. Topic #1: Entrepreneurship Control vs. Letting Go• Have control & not at the same time.• Adaptable since what users want change as do plans.• Trial & error-change their ideas as they develop them to give users what they want.• Deal with rejection early on; the most fragile time. www.IVIpe.com Info@IVIpe.com
  19. 19. Topic #1: Entrepreneurship Planning vs. Execution• Attitude & energy for action• Have a general idea of the direction they are headed• Adapt not plan• Strategy is a discovery process vs. a planning process www.IVIpe.com Info@IVIpe.com
  20. 20. Entrepreneur’s Work Philosophy www.IVIpe.com Info@IVIpe.com
  21. 21. Topic #2: History of VC www.IVIpe.com Info@IVIpe.com
  22. 22. Topic #2: History of VC www.IVIpe.com Info@IVIpe.com
  23. 23. Topic #2: History of VC Invested $70k (1957) ROI: $377MM (1968) IRR: 101% In $1999-$2010: $415k=$2.4 Billion www.IVIpe.com Info@IVIpe.com
  24. 24. Topic #2: History of VC 1969: Pension Fund Reform www.IVIpe.com Info@IVIpe.com
  25. 25. Topic #2: History of VC Invested $57k (1978) ROI: $14MM (1981) IRR: 23,000% In $2007-$2010: $185k=$35 million www.IVIpe.com Info@IVIpe.com
  26. 26. Topic #3: VC in the World www.IVIpe.com Info@IVIpe.com
  27. 27. Topic #3: VC in the WorldInternet & New Economy Business Models • 1999 Vintage Funds Returned 150% • Momentum & Greed replaced common sense • Business Plans Funded without thorough Analysis of their Weaknesses • 1st Mover = 1st Loser www.IVIpe.com Info@IVIpe.com
  28. 28. Topic #4: How Venture Capital Works www.IVIpe.com Info@IVIpe.com
  29. 29. Topic #4: How Venture Capital Works www.IVIpe.com Info@IVIpe.com
  30. 30. $ Flows into VC www.IVIpe.com Info@IVIpe.com
  31. 31. Liquidity vs. Profits www.IVIpe.com Info@IVIpe.com
  32. 32. Risk & Return www.IVIpe.com Info@IVIpe.com
  33. 33. Topic #4: How Venture Capital Works The Reality (Business) of VC (How it Works)Equity is a Great Product, but: 1. It’s Expensive (% ownership) 2. Selective-1/100 SMEs (in USA) seeking VC get $$  Need Big Markets ($50-$100MM)  People (Technical, Mkting, Mgt, Support, etc.) 3. Requires Capital Mkts &/or Strategic Buyers www.IVIpe.com Info@IVIpe.com
  34. 34. Topic #4: How Venture Capital Works ProbabilityIndividual Event 80% Company has enough $$ 80% Mgt. Capable & Focused 80% PD Successful 80% Mfging Successful 80% Competitors Behave as Expected 80% Customers Want Product 80% Pricing is Correct 80% IP Issued 17%Combined Probability of SuccessLow Success Rate = Invest 1 of every 100 deals www.IVIpe.com Info@IVIpe.com
  35. 35. Topic #4: How Venture Capital Works www.IVIpe.com Info@IVIpe.com
  36. 36. Topic #4: How Venture Capital Works Requirements to Receive VC1. Large addressable market or defined niche2. Uniqueness in concept or application to create LT competitive advantage (vs. 1st mover advantage) &/or Do it Better vs. the Competition3. Focused management4. Liquidity potential www.IVIpe.com Info@IVIpe.com
  37. 37. Topic #4: How Venture Capital Works Value-Added of VC (Beside $$)1. Sometimes Create the Deal2. Raise New $$$ & Add Corporate Governance, Experience & Contacts3. Keep Interests Aligned4. BOD Participation, not Manage the Firm5. Encourage Founders to Think in Kilometers, not Centimeters www.IVIpe.com Info@IVIpe.com
  38. 38. Topic #4: How Venture Capital Works VC & PE in CIS & Russia1. Two major investors EBRD & US Gov’t2. Enterprise Funds in CEE3. Enterprise Funds in CIS/Russia4. EBRD Funds in CEE, CIS & Russia5. Approximately $4 Billion Committed, 75%+ from the Multilaterals (w/IFC & DFIs)6. Growth in Oligarch Funds/PE www.IVIpe.com Info@IVIpe.com
  39. 39. Topic #4: How Venture Capital Works VC to PE in Russia Today1. 1st in VC (1994-1999). Deals w/VC Characteristics. Migrated to PE financing/growth in Post Financial Crisis2. Expansion Stage Financing, US$2-$20 million/deal with limited syndication3. Deals = For Domestic Economy, FMCC, F&B, Retailing, Real Estate, Wholesaling, Transportation & Western Successes Transplanted to Russia, Sabarro Pizza www.IVIpe.com Info@IVIpe.com
  40. 40. Topic #4: How Venture Capital Works Emerging Interest in Tech-Russia1. Intel Capital, AddVenture, etc.2. One-off Deals by PE Investors, Barings3. Russian Gov’t Initiatives-Regional VC, RVC & Rusnano4. Multiple Infrastructure Groups Emerging; doing Conferences, Exhibitions, facilitating Collaborative R&D, etc. www.IVIpe.com Info@IVIpe.com
  41. 41. Topic #4: How Venture Capital Works Why Little €/$ Goes to Russian Tech1. Capital Seeks the Highest Rate of Return  Strong Growth in Non-tech, Retailing, Distribution, FMCC, F&Bs, etc.2. Competition from Stock Mkt & Real Estate3. Competition from Israel, US, Europe, etc. www.IVIpe.com Info@IVIpe.com
  42. 42. Topic #4: How Venture Capital Works Most Tech Opts in Int’l MktsWhere Demand Is ButGaining Access is ExpensivePenetration & Growth Takes Much Time www.IVIpe.com Info@IVIpe.com
  43. 43. Topic #4: How Venture Capital Works Most Tech Opts in Int’l Mkts Where Demand Is Gaining Access is Expensive Penetration & Growth Takes Much TimeRussian Deal Flow is too Young to Meet Int’l Test Instead, Target Domestic Market, e.g., Tech for Oil/Gas Industry, Auto Components, Systems Integration www.IVIpe.com Info@IVIpe.com
  44. 44. Topic #4: How Venture Capital WorksFACT: Russia Has Good Ideas: Ideas ≠ Deals1/200 SMEs seeking VC get €/$: Why Reject? Undeveloped Opportunity Lack of Uniqueness/No Competitive Advantage Too much $$$, too much time & too little reward People (mgt./employees) Lack of Transparency, No Clear Title/Ownership of IP www.IVIpe.com Info@IVIpe.com
  45. 45. Topic #4: How Venture Capital Works What’s Common Here? www.IVIpe.com Info@IVIpe.com
  46. 46. Topic #4: How Venture Capital Works SummaryEntrepreneurship & VC are linkedVC only successful if entrepreneurs aresuccessful www.IVIpe.com Info@IVIpe.com
  47. 47. Where is the Technology?
  48. 48. Technology In Many Places! Just Look & DefineSlaughter Raising Genetic Engineering & Breeding Butcher Distribution, Storage & Retail LocationsProcessing- Ham, Kielbasa Delivery 16-19 November 2009 www.IVIpe.com Info@IVIpe.com
  49. 49. Thomas D. Nastas Tom@IVIpe.com www.IVIpe.com Tel. +7.985.923.4727 Tel. +1.517.899.1432Innovative Ventures Inc. Haslett, MI USA 23 June 2010
  50. 50. Case Study Discussion & Analysis: HotmailWhat are objectives (implicit/explicit)?What decisions (implicit/explicit) must s/hemake/face?What problems, opt’s, & risks does s/he face? www.IVIpe.com Info@IVIpe.com
  51. 51. Case Study Discussion & Analysis: Hotmail• Does the opportunity fit Hotmail’s core competencies?• Did they think imaginatively about the business model?• Did their product change the lives of their customers?• What are the learning curve lessons from Hotmail that you can apply to your work situation? www.IVIpe.com Info@IVIpe.com
  52. 52. Case Study Discussion & Analysis: Hotmail• What was their value creation model?• Did they create value? For whom?• Were the macro-economic and environment factors in Hotmail’s favor? Did demand exist? In their target market(s)? What about customers ability to pay? What about future forecasts? www.IVIpe.com Info@IVIpe.com
  53. 53. Case Study Discussion & Analysis: Hotmail• What changes do customers need to make to use the service?• How did ‘partners’/competitors impact their model & chance for success?• Were they undercapitalized? www.IVIpe.com Info@IVIpe.com
  54. 54. Case Study Discussion & Analysis: HotmailWhat evidence do I have to help make the decision?Is the evidence reliable/unbiased? Can I improve it?What alternative courses of action are available?What criteria should I use to evaluate the alternatives? www.IVIpe.com Info@IVIpe.com
  55. 55. Case Study Questions to Ask YourselfWhat action should I take?How should I convince others in the case & theclassroom that my approach is best?What did I learn from this case?How does it relate to past cases & my ownexperience? www.IVIpe.com Info@IVIpe.com

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