Ent101 - Different Types of Entrepreneurship

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Ent101 - Different Types of Entrepreneurship

  1. 1. Slide 1 MaRS
  2. 2. ` Business Development and Entrepreneurship Basics Presented by: Tony Redpath & Allyson Hewitt Vice President, Partner Programs Director, Social Entrepreneurship MaRS Discovery District 6 October 2010 Slide 2 MaRS
  3. 3. Slide 3 MaRS
  4. 4. Start with the Basics 1) Why do I want to start this business? • What is my motivation? • Do I want to make money and make a difference? 2) What resources do I need? •  Basement vs. Corporate Office vs. Shared Spaces 3) How do I fit into the rest of the world? • Is my service/product unique? 4) What is my business model? •  For profit, non profit, hybrid model Slide 4 MaRS
  5. 5. The Organizational Spectrum Non-profit that generates revenue Social Traditional Traditional Purpose Corporation Charity Social Business Enterprise Corporate Social Responsibility (CSR) Slide 5 MaRS
  6. 6. Types of organizations: CONSULTING  Key Characteristics:   Multiple Participants, Diverse focus, Size   Examples –  Hatch Associates –  Aperio  Benefits & Risks of Model   Low Capital Costs & Minimal Input   Liability Insurance; lack of support Slide 6 MaRS
  7. 7. Types of organizations: SERVICES Slide 7 MaRS
  8. 8. Types of organizations: SERVICES  Key Characteristics:   Specialty business serving existing businesses   Examples  Benefits & Risks of Model   On-line software as a service   Capital Costs can be high: labs services: servers Slide 8 MaRS
  9. 9. Social Venture: SERVICES Slide 9 MaRS
  10. 10. Types of organizations: PRODUCTS Slide 10 MaRS
  11. 11. Types of organizations: PRODUCTS   Products   Key Characteristics:   Tangible offering ( pharmaceutical compound, medical device, consumer product   Examples   Benefits & Risks of Model   High development costs; market traction   Production costs high: outsource?   Potential for huge scale Slide 11 MaRS
  12. 12. Social Venture: PRODUCTS Slide 12 MaRS
  13. 13. Show me the Money….   Forms of Financing  Debt - borrow from someone, using an asset as security; rate & time period to be negotiated   Equity - sell a piece of your venture to someone in exchange for an investment in the venture   Bootstrap - self-fund and reinvest all profits for growth   Grants – foundations/government funding   Hybrid Models – important to both enterprise types Slide 13 MaRS
  14. 14. The Lemonade Stand Example Assume you’re 8 years old and you need $20 to set up a lemonade stand Revenues Debt 50:50 Equity Rain $10 lender loses $10 partner loses $15 entrepreneur gets $0 entrepreneur gets $5 Cloud $30 lender is even partner loses $5 entrepreneur gets $10 entrepreneur gets $15 Sun $50 lender is even partner makes $5 entrepreneur gets $30 entrepreneur gets $25 Slide 14 MaRS
  15. 15. The Lemonade Stand Example II Assume you’re 8 years old and you need $20 to set up a lemonade stand Revenues Debt 50:50 Equity Rain $10 lender loses $10 partner loses $15 entrepreneur gets $0 entrepreneur gets $5 Cloud $30 lender is even partner loses $5 entrepreneur gets $10 entrepreneur gets $15 Sun $50 lender is even partner makes $5 entrepreneur gets $30 entrepreneur gets $25 Slide 15 MaRS
  16. 16. Where can I get debt financing?  YOU Slide 16 MaRS
  17. 17. Sources of Equity Financing  The 3F’s again – Friends, Family and Fools  Angels (aka high net worth individuals)  Generally like to invest in areas that they have worked in or are comfortable with  Can add valuable hands-on experience  http://www.angelinvestor.ca/  http://www.mapleleafangels.com/186103_186104.html  Venture Capital Funds  Different funds invest at different stages in the growth of a company  http://www.cvca.ca/ Slide 17 MaRS
  18. 18. Special Financing Sources  Proof of Principle / Idea to Innovation   www.ResearchNet.com  www.nserc-crsng.gc.ca/index_eng.asp  NRC - IRAP  http://irap-pari.nrc-cnrc.gc.ca/main_e.html   Foundations:  Trillium Fund - www. TrilliumFoundation.org  Gates Foundation – www.gatesfoundation.org Slide 18 MaRS
  19. 19. The Financing Life Cycle Public Markets Venture Capital Seed Funds Angels Grants Risk Concept Start-up Growth Expansion Slide 19 MaRS
  20. 20. The Financing Life Cycle Public Markets Venture Capital Seed Funds Angels Grants Risk Concept Start-up Growth Expansion Slide 20 MaRS
  21. 21. The Financing Life Cycle Risk Grants Concept Start-up Growth Expansion Slide 21 MaRS
  22. 22. How do I secure financing/support? Investors/backers are concerned about risk associated with any start-up Slide 22 MaRS
  23. 23. What are the Risks?   Technology Risks   Stage of Development (concept  proof of concept  prototype of product)   Product development path (costs and “risks”)   Competitive technologies   IP Risks  Nature of the invention  Scope of the invention   IP form: Patent, know-how, software Slide 23 MaRS
  24. 24. Risks Continued   Market Risks   Market size, dynamics and growth potential   Route to market, access, scalability   USPs of the products or services   Execution Risk  Knowledge of the market, networks  Skills required to move the enterprise through all stages of development  Reputation in the marketplace Slide 24 MaRS
  25. 25. Risks for the Social Venture   Mission Drift   Balancing a Social and Financial Bottom Line   Execution Risk   Knowledge of the market, networks  Skills required to move the enterprise through all stages of development  Reputation in the marketplace   Lack of Awareness  This is an emergent area and it is tough to get people to get it Slide 25 MaRS

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