Interprenureship planning and financing the venture
PLANNING AND FINANCING THE VENTURE
The investment firm is called a venture capital firm,
and the money that it gives is called venture capital.
Harvest system : harvest system is based on the
fundamental elements of any system : Input
LEVEL 2. Product/service level
Effective product concept
Target market value .
Level .2: Venture level
Well-built venture : e.g.nvt ,debt vs. equity
1) The product /service level
2) The venture level
The product service level : The idea that there is a
process can be planned and enacted to make a product
concept valuable in a in a specific market is a powerful
New combination : Drucker ( 1995) entrepreneurship as
an act of innovation that involves endowing existing
resources with new wealth-producing capacity.
Two major categories of entrepreneurial discovery exist.
1) Scientific discovery
2) Circumstantial discovery.
Scientific or circumstantial discovery can occur within five
different domains of new combination ( Schumpeter ,
1) The introduction of a new good or an improved good ,
2) The introduction of a new methods of production
3) The opening of a new market ,
4) The conquest of a new source of supply of new materials
5) The reorganization of any industry .
o Product – Market Match : Without a product – market
match , an idea or product / service level .
Net Buyer Benefit : its not one that was used often in the
business literature prior that to time. It is the concept of
net buyer benefit.
oDescription of target market
oValue creation strategy
Given this new information , is the
market attractive to enter
oCan the venture attain sufficient
market share ?
oDoes this venture have the
capability to satisfy these wants
and needs ?
not to one b
Determine competitive positioning
Determine product concept
Determine the market
yes to all
Does this meet the needs of the
target market ?
Will consumers wants this more
than their money ( is there
Is there a sustainable advantage?
not be one
yes to all
•Differentiation / low cost
Are consumers willing to pay the
price /need t hem to pay ?
Will consumer s be able to
differentiate this offering ?
Can the venture complete as the
low –cost provider?
If answered not
to one b more
yes t o all
Venture level plan /
The venture level
Hare have two words explicitly and explicitly: explicitly ,
recent research suggest key guide lines for the „‟ preparation
“ and “presentation” of entrepreneurial business plans and
implicitly suggest attention to “practice “ and persistence “.
dimension, as suggested in table
The business model
Expectations: In the deal screening stage , an EBP is expected to
a) Key success factors and risk can be clearly identified and are
b) The venture has a large projected market with good potential
A strategy for commercialization , profitability , and market
dominance is present :
d) A strong proprietary and competitive position can be established
and protected .
Milestone : Hindle (1997) Suggests that the writer of an EBP must
„‟identify all major plan objectives, primarily as financial target.
Opportunity : Because no opportunity lasts forever and because
consumer trends and tastes, the competitive landscape , and
technological innovation all evolve over time , an initial
opportunity inevitable change.
Context: Four key aspects should be covered by an EBP
to adequately describe the context within which the new
venture is intended to function ( sahlman, 1997).
First , entrepreneurs
should demonstrate how the new
venture‟s context helps b hinders their specific proposal.
Second , EBP writers should demonstrate how the venture‟s
context will change, describe how those changes,
Third , the EBP should spell out what management can do in
the event the context grows unfavorable.
Fourth , The EBP should explain the ways in which the
entrepreneurial team can affect context in a positive way.
The Business Model : the business model is brief statement of
how an idea actually becomes a business that creates value.
Team : at this point in the preparation of an EBP , the
credibility of the venture comes into play , and the first
principle of credibility relates to the decision makers--
Elaboration : The capability to elaborate, to break down individual
task in to their subparts , is also critical to new venture credibility.
Scenario integration: Sahlman (1997) suggest that claiming an
insuperable lead b a propriety market position is naive.
Financial link: In the presentation of financial in an EBP , the key
assumptions related to market size, presentation rates, and timing
issues of market context substantiated in the text of the EBP should
be linked directly to the financial statements ( hindle, 1997)
The deal: If the main idea behind the planning process is to enact a
harvest , then one of the primary purpose of an EBP is naturally to
attract an investor , there by linking input and output through the
planning /financing process.