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Creating a Winning E-Business Second Edition. Getting Your E-Business Off The Ground Chapter 4. Learning Objectives. Describe the financing issues associated with an e-business startup Discuss the role of informal investors in an e-business startup

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Creating a winning e business second edition

Creating a Winning E-BusinessSecond Edition

Getting Your E-BusinessOff The Ground

Chapter 4


Learning objectives
Learning Objectives

  • Describe the financing issues associated with an e-business startup

  • Discuss the role of informal investors in ane-business startup

  • Identify issues important to venture capital investors

Creating a Winning E-Business Second Edition, Chapter 4


Learning objectives continued
Learning Objectives(continued)

  • Pitch your e-business idea to investors

  • Discuss the advantages and disadvantages of business incubators

Creating a Winning E-Business Second Edition, Chapter 4


  • Starting a new e-business :

    • building a Web site prototype,

    • conducting market research,

    • renting office space,

    • buying or leasing equipment,

    • hiring employees

      —that require funds

Creating a Winning E-Business Second Edition, Chapter 4


Startup financing
Startup Financing

  • Bootstrapping

    • Self-funding

    • Sweat equity

      • Invest your own time, effort, money, even re-mortgage and personal loan

    • Finding unique and inventive ways to acquire resources without borrowing money

  • Informal investors

    • Friends

    • Family members

    • Angel investors

Creating a Winning E-Business Second Edition, Chapter 4


Startup financing continued
Startup Financing (continued)

  • Friends and family members

    • Know and trust entrepreneur

    • Stand by during tough times

    • Invest in entrepreneur rather than business idea

    • Downside is potential risk to relationships

      • Business misunderstandings

      • Business failure

Creating a Winning E-Business Second Edition, Chapter 4


Startup financing continued1
Startup Financing (continued)

  • Angel investors

    • Individuals with money and time who enjoy the excitement of early-stage investing

    • Not averse to taking risks

    • Primarily interested in business idea

    • Angel investment club members

      • Accredited investors with minimum net worth of $1M or annual income of $200,000 or household income of $300,000 over the last two years

Creating a Winning E-Business Second Edition, Chapter 4


Startup financing continued2
Startup Financing (continued)

Creating a Winning E-Business Second Edition, Chapter 4



Cast study
Cast study

  • Read the “Of Angels and E-Mail” case.

  • How did Sendmail get its start?

  • Do you think it was difficult or easy to get angel investors to look at the Sendmail e-business idea? Why?

  • Why do you think the Sendmail e-business idea was attractive to the members of Band of Angels and the co-founders of Sun Microsystems?

Creating a Winning E-Business Second Edition, Chapter 4


Startup financing continued3
Startup Financing (continued)

Creating a Winning E-Business Second Edition, Chapter 4


  • 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • 著名的商业天使就有作为微软公司创始人之一的保·艾伦 (PaulAllen)等。

  • 据介绍,其实高风险与高收益总是孪生体,天使投资一般投资具有高成长性的科技型项目,其收益率普遍在50倍以上,超过万倍的回 报也不少见。

    • 1992年,美国苹果公司刚创办时一笔9.1万美元的投资,6年后实现了1.54亿美元的回报。

    • 搜狐网站当初创办时,张朝阳身无分文,其导师 尼葛洛庞帝和一位同学投资了22万美元,后来也实现了上百倍回报。

Creating a Winning E-Business Second Edition, Chapter 4


Startup financing continued4
Startup Financing (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Venture capitalist investors (VCs)

    • Professional investment company

    • Provide funds for startup businesses in exchange for equity position

    • Raise funds from endowments, insurance companies, and pension funds

Creating a Winning E-Business Second Edition, Chapter 4


Start up financing
Start up financing 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Venture capital investors:

    • Have to give up a large equity stake (20-40%)

    • One or more seats on board of directors

    • Have experienced management team member

    • Offer knowledge and contact

Creating a Winning E-Business Second Edition, Chapter 4


Startup financing continued5
Startup Financing (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Venture capitalist investors (VCs) (continued)

    • Take many forms

      • Traditional partnerships

      • Government-sponsored investment companies

      • Corporate funding programs by high-tech companies

Creating a Winning E-Business Second Edition, Chapter 4


Startup financing continued6
Startup Financing (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

Creating a Winning E-Business Second Edition, Chapter 4


Startup financing continued7
Startup Financing (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

Creating a Winning E-Business Second Edition, Chapter 4


Startup financing continued8
Startup Financing (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Venture capitalist investors (VCs) (continued)

    • E-business startup VC funding examples

      • Draper Fisher Jurvetson (DFJ) and Hotmail

      • Kleiner Perkins Caufield & Byers and Google

      • Small Business Investment Companies (SBIC)and America Online

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators
Business Incubators 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Nurture startup businesses

    • Offer development, administrative, and support services

      • Office space

      • Telecommunication hookups

      • Reception and conference room facilities

      • Computer networks

      • Advisory services

      • Access to potential investors

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Non-profit organizations or commercial businesses

    • Offer a quick “leg up” for entrepreneurs needing administrative and support services

    • Provide access to knowledgeable professionals, advisors, potential investors

    • Cost to entrepreneur

      • Fees for services

      • Loss of equity

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued1
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Advantages

    • “One-stop solution” for many startup problems

    • Easy access to professional advice

    • Venue for interacting with other startups

  • Disadvantages

    • May be hefty fees for services

    • Giving up share of ownership equity to others

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued2
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Non-profit business incubators

    • Generally cooperative venture between a university and local community

    • Examples

      • Austin Technology Incubator (ATI)

      • Advanced Technology Development Center (ATDC)

      • Houston Technology Center

      • Illinois Technology Enterprise Center (ITEC)

      • Women’s Technology Cluster (WTC)

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued3
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued4
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued5
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued6
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued7
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued8
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Commercial business incubators

    • Businesses that provide incubation services for a fee and usually a large equity position

    • Examples

      • Batavia Industrial Center (BIC)

      • Idealab

      • eCompanies

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued9
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

Creating a Winning E-Business Second Edition, Chapter 4


Business incubators continued10
Business Incubators (continued) 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Self-incubation

    • Participating in a members-only group of entrepreneurs

      • Share practical experience

      • Access to contacts

      • Sell or barter products and services with members

    • Example

      • Starve Ups

Creating a Winning E-Business Second Edition, Chapter 4


Sponsoring entities
Sponsoring Entities  们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • 8% Academic Institutions

  • 40% Government

  • 28% Economic Development Organizations

  • 4% For-Profit Entities (Corporations)

  • 8% Hybrid

  • 12% Not Applicable

Creating a Winning E-Business Second Edition, Chapter 4


Pitching your e business idea
Pitching your e-business idea 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • The first sales meeting with angel investors or VCs

  • To get potential investors excited and interested in further discussion

  • One hour brief presentation

  • Hand out two to three pages based on Executive Summery of your business plan

Creating a Winning E-Business Second Edition, Chapter 4


Pitch presentation
Pitch presentation 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • Define your product or service

  • Highlight the market need

  • Explain how your e-business meets that need

  • Potential profits

  • How your e-business’s management team can make it all happen

  • Make your proposal presentation

Creating a Winning E-Business Second Edition, Chapter 4


Pitching your e business to investors continued
Pitching Your E-Business 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。To Investors (continued)

  • Learn as much as possible about potential investors before the pitch meeting

  • Be prepared for investor questions about

    • Business idea

    • Target market

    • Competitors

    • Critical marketplace issues

  • Do not fake answers; if you don’t know, simply say so and move on

Creating a Winning E-Business Second Edition, Chapter 4


Pitching your e business to investors continued1
Pitching Your E-Business 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。To Investors (continued)

  • During the pitch meeting

    • Be on time

    • Be prepared

    • Be enthusiastic

    • Bring all necessary equipment and documents

    • Differentiate yourself and management team from your competitors

    • Create the feeling that your e-business idea is a viable, exciting investor opportunity

Creating a Winning E-Business Second Edition, Chapter 4


How to be a good speaker
How to be a good speaker 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • I will not waste your time.

  • I know who you are and I know why you came.

  • I am well organized.

  • I will deliver this speech in an interesting, conversational way.

  • I know my subject.

  • Here are my most important points.

  • I am finished.

    From How to Give a Terrific Presentation by Karen Kalish (AMACOM, 1996).

Creating a Winning E-Business Second Edition, Chapter 4


Creating a Winning E-Business Second Edition, Chapter 4 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。


Creating a Winning E-Business Second Edition, Chapter 4 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。


Chapter summary
Chapter Summary 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。

  • An entrepreneur should expect to invest personal funds in a startup

  • Informal investors include friends and family members and angel investors

  • Angel investor – A wealthy individual who enjoys investing in startups

  • Venture capitalist – A professional investor

Creating a Winning E-Business Second Edition, Chapter 4


Chapter summary continued
Chapter Summary 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。(continued)

  • Meeting with investors

    • First meeting is a “pitch” or sales meeting

    • Use a carefully prepared pitch document

    • Anticipate questions

    • Be on time, be prepared, and be enthusiastic

  • Pitch document – A brief sales document based on the Executive Summary portion of the business plan

Creating a Winning E-Business Second Edition, Chapter 4


Chapter summary continued1
Chapter Summary 们往往注意美国的纳斯达克市场、风险投资市场如何发达,但却忽视了美国大量的商业天使的存在。(continued)

  • Non-profit and commercial business incubators offer access to resources in exchange for fees and an equity position

  • Self-incubation offers access to some resources without paying fees or giving up equity

Creating a Winning E-Business Second Edition, Chapter 4


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