BUSINESS
ENTREPRENEURSHIP
CLASS

LECTURE SLIDES

FUNDING THE STARTUP

SPRING 2013
ERDEM OVACIK
WHAT KIND OF RETURN DO YOU SEEK & PROMISE?

High risk & high return

Blue Ocean,
new product /
service

Easier to get
fund...
Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
RECENT IPO VALUATIONS OF TECH STARTUPS

Erdem Ovacik – Business Entrepreneurship Project – Spring 2013

5
VENTURE CAPITAL PER REGION IN THE USA

Erdem Ovacik – Business Entrepreneurship Project – Spring 2013

6
CONSOLIDATION & STEADY MONEY FLOW SINCE 2002

Erdem Ovacik – Business Entrepreneurship Project – Spring 2013

7
WHAT TO EXPECT FROM INVESTORS?

Erdem Ovacik – Business Entrepreneurship Project – Spring 2013

8
FRIENDS AND FAMILY
Focus on you being happy and productive.
They don’t have financial expectation, but expectation that
yo...
GOVERNMENT / FOUNDATION GRANTS
Focus on story telling value and making sure they are safe.
They don’t have financial expec...
ANGEL INVESTORS
Focus on personal interest and return
Angels pick startups in their areas of interest and knowledge.
They ...
VENTURE CAPITALISTS
Focus on return
VCs think that 1 out of 10 investments will succeed. And that
one will bring home enou...
BANKS, FINANCIAL INSTITUTIONS
Focus on potential loss.
They have fixed return expectation (5-10% per annum), thus
they foc...
TAKE A LOOK INTO THE FUNDING / PAYOUT CALCULATOR

https://www.smartasset.com/infographic/startup
Erdem Ovacik – Business E...
ASSINGMENT #9

• Describe 2 persons you’d like to
partner up / work with you
• Describe your ideal investor, and the
amoun...
TEAM MEMBER DESCRIPTION
Responsibilities.

Define:

Describe role, ensure
expectations are
aligned.

•
•
•
•
•
•
•
•

Peop...
INVESTOR DESCRIPTION
Ideal Profile.

Define:

Other enquiries

Connections and
experience in industries,
or roles. Tech st...
ASSIGNMENT #10: BUSINESS PLAN
•
•
•
•
•
•
•
•
•
•

Problem (~1page)
Solution (1-2 pages)
Market (~1 page)
Unique Value Pro...
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Funding slides

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Funding slides

  1. 1. BUSINESS ENTREPRENEURSHIP CLASS LECTURE SLIDES FUNDING THE STARTUP SPRING 2013 ERDEM OVACIK
  2. 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 2
  3. 3. Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
  4. 4. Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
  5. 5. RECENT IPO VALUATIONS OF TECH STARTUPS Erdem Ovacik – Business Entrepreneurship Project – Spring 2013 5
  6. 6. VENTURE CAPITAL PER REGION IN THE USA Erdem Ovacik – Business Entrepreneurship Project – Spring 2013 6
  7. 7. CONSOLIDATION & STEADY MONEY FLOW SINCE 2002 Erdem Ovacik – Business Entrepreneurship Project – Spring 2013 7
  8. 8. WHAT TO EXPECT FROM INVESTORS? Erdem Ovacik – Business Entrepreneurship Project – Spring 2013 8
  9. 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. Erdem Ovacik – Business Entrepreneurship Project – Spring 2013 9
  10. 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. Erdem Ovacik – Business Entrepreneurship Project – Spring 2013 10
  11. 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 Erdem Ovacik – Business Entrepreneurship Project – Spring 2013 11
  12. 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 Erdem Ovacik – Business Entrepreneurship Project – Spring 2013 12
  13. 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 Erdem Ovacik – Business Entrepreneurship Project – Spring 2013 13
  14. 14. TAKE A LOOK INTO THE FUNDING / PAYOUT CALCULATOR https://www.smartasset.com/infographic/startup Erdem Ovacik – Business Entrepreneurship Project – Spring 2013
  15. 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. 16. TEAM MEMBER DESCRIPTION Responsibilities. Define: Describe role, ensure expectations are aligned. • • • • • • • • 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. 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. 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. Erdem Ovacik – Business Entrepreneurship Project – Spring 2013

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