1. What are various sources of equity investment?

Super-angels, who invest their own funds rather than managing money for others. Invest higher amounts compared to angels. Public stock, either by holding shares in a publicly traded company or by selling some of your company stock to raise further money. Private equity that includes venture capital, leverage buyout, growth capital, distressed or special situations and mezzanine capital.

2.  What guidelines should entrepreneurs follow when they are selecting a venture capitalist?

• Scrutinize you business with a critical eye
• Beef up management
• Keep a high profile so the VCs will visit
• Target the search
• Keep a lookout
• Investigate possible venture partners

3. What are the different between a single hit and a home-run business?

A home-run business requires investing more and more capital over a long period and the investment returns are poor. Whereas a single hit,  you build “essential” assets for an early sale to a larger company in two or three years.

5. What are the four key factors that a banker seeks before providing a corporate?

• Character which includes such traits as talent, reliability, and honesty.
• Cash flow to cover debt service must be available throughout the term of the obligation.
• Collateral to support at least part of the loan should the company be unable to meet its obligations.
• Contribution by the entrepreneur towards the funding requirement.

1. What sources of funding are available to entrepreneurs at the early stage of the company?

Self-funding, moonlighting and consulting (bootstrapping), family and friends, angels, micro-equity and micro loans, banks loans, factoring and supplier funding, personally secured bank loans, government sources of funding .

2. What are “virtual” companies? What tools help them function? Why are they of interest to an entrepreneur?

A virtual company is a company that has no office, very few employees, no communication costs, low legal costs. Companies like these highly rely on tools from the internet (skills, software, social media).For the entrepreneur,  the aim is to reduce the level of monthly fixed costs to a minimum, and be more flexible.

3. Describe seven techniques for bootstrapping that you could use if you started a company.

• No or low rent: for example working from home, co-working space/incubator
• Bartering for goods and service: offer something in exchange of something else
• Trading intellectual property rights
• Renting or leasing equipment
• Used equipment
• Access to expensive equipment: university or government labs
• Outsourcing 

4. Why is bootstrapping important for (a) closely held companies and (b) early-stage, high-growth companies seeking equity investors?

Bootstrapping is important for closely held companies because this way, they keep costs lower and the company can grow without any investors and the owner(s) doesn’t lose control of the business. It is an organic way of growing. However, bootstrapping might also be important for early-stage high-growth companies seeking equity investors because you can show the investors how viable the project is and they are more likely to invest in something they know the owner takes seriously and has been able to keep growing on his own.

5. What is meant by factoring of purchase orders? 

You get funding for operations from a private lender securing these loans with the orders you already have. When you customers pay you, the cash goes directly to the lender. He then takes back the amount plus interest and hands you back cash, if any left.

6. How can suppliers help in providing working capital?

If you make sure you will purchase from them, they might offer a credit.

1. What financial measurements should be prepared to measure company performance?

Budgets, cash flow forecasts, breakeven analysis, measuring sales volume, measuring profits, and measuring cash generated.

2. What are the categories and steps in preparing a financial budget?

• 1. Sales
• 2. Cost of Goods Sold
• 3. Gross Profit 
• 4. Operating Expenses
• 5. Operating Profit/Loss
• 6. Other Income and Expenses
• 7. Pretax Income
• 8. Income Taxes (management’s estimates of what taxes will be owed on its earnings.)
• 9. Net Income (the amount available for dividends or reinvestment in the company)
• 10. EBIT (earnings before interest expense, interest income, and income taxes. It measures the profitability of the company’s current operations as if it had no debt or investment.)
• 11. EBITDA (earnings before interest expense, interest income, income taxes, depreciation, and amortization. It measures the profitability of a company’s operations without the impact of its debt, investments, and long-term assets)

4. Describe the breakeven technique in the decision-making model to determine profit and loss.

The breakeven technique helps the entrepreneur determine whether a certain volume of output will result in a profit or loss. the point at which breaking even occurs is the volume of output at which total revenues equal total costs. To use this technique you need only know the fixed costs of operation, variable costs of production, and price per unit.

A quick way to calculate the breakeven point is to use the following formula. The price per unit (P) multiplied by the number of units sold (X) is equal to the fixed costs (F) plus the variable costs (V) multiplied by the number of units produced expressed by the following formula:

P(X) = F + V(X)

6. Why is building a corporate culture to match a company’s mission important?

Because the ability to lead an organization on a mission where everyone is involved every day in moving toward clearly defined goals makes the difference between success and failure.

7. Select six leadership attributes that you feel are the most important when building a strong culture. Why?

Honesty is important because people within an organization need to trust their environment. I believe alignment is important since employees need to understand the goals/objectives of the company they work for. Teams in order to increase performance. Empowerment and support  will make employees feel better on the workplace and make they more inclined to generate new ideas. Good communication eases interaction among the whole business and make the company faster to respond to problems.

8. Name three important factors that you must take into account when hiring key people.

• Do they have the necessary skills?
• Do the have the will/determination?
• Are they going to fit in the existing team?

1. Name three factors that impact how a new technological innovation fits existing market conditions

• Path dependency: the future is an extension of the past, and you must take into account the history of developments that are already embedded in commerce. For example the keyboards. There have been other ones (that are even better) but nobody uses them because they are so used to QWERTY keyboards already.

• Network effects which means that the more people use a service/product, the higher the value for the new users.

• Government regulations

3. Name 2 factors that impact the “market window of opportunity. “

• The hype cycle
• The technology adoption cycle

5. Name a product that is currently being used by early adopters only.

I would say Apple Pay. It is available for customers to use since 2014. But only a few people are using it for now.

What is the primary driver of the social entrepreneur?

The primary driver for a social entrepreneur is addressing social issues and providing what he believes is a solution.

Should green or cleantech ventures be classified as social enterprises? If so, why?

Yes. Because they are concerned about the environment. And even though their aim might be to make profit, they are still considered a social venture.

 What are some of the negatives of forming the social venture as a nonprofit?

• Expensive
• Time consuming
• Too many legal requirements
• Cannot keep information “private”

Why do stakeholders view the social venture differently from a traditional venture?

Because they tend to always associate social ventures to non-profit not knowing for example that a social venture even though it focuses on societal change, can also be a money making venture.

What are some of the growth challenges of a social venture?

• Not being able to find the funding/convince the investors in order to grow
• Transparency expectations
• Venture goals/ideas not aligned with those of the employees

The differences between Social Entrepreneurship, Corporate Social Responsibility, and Philanthropy

Philanthropy one of the many tools the company can use as part of it’s CSR agenda. Furthermore, philanthropy can be occasional. A company doing a donation to an organization and that’s it. Where CSR tends to focus on the long run.

Social entrepreneurship is completely building the “change” factor into the company’s business model whereas a company CSR is something a company decides to undertake or not.

The differences between Social Entrepreneurship and Business Entrepreneurs

The main difference is the reward. A business entrepreneur tend to see the reward in terms of money (profits) whereas the social entrepreneur focuses on his impact on the community. But probably because there are different factors that influence them. A business entrepreneur might get pressure from the partners/investors/banks whereas someone who puts his money in a social venture would tend to have different motivations than making profit.

Scheduled delivery system (and mobile application)

Our product can be used by anyone who purchases stuff online. If you don’t want your stuff dropped in front of the door because it can be stolen or live in a building with no doorman. A lot of buildings are trying to reduce costs since renters complain about high prices. Therefore, certain buildings for example in NYC no longer have doormen, replaced by electronic security systems. Sometimes you might have something unexpected and therefore not be there for your delivery.

Out of 5 billion retail shipments in the US in 2013, 100 million were failed deliveries. We are offering a solution to this problem. Intermediary between delivery company and receiver.

We are going to focus on big cities first.

Product schedule delivery everyday of the week (between 4 and midnight)

Value pricing 

Key partners

• US Postal Service, UPS, FedEx
• Depot partners
• Online retailers

Key activities

Problem solving

Key resources 

• Depot operated by the company
• Cars
• Drivers
• Databases, servers

Value proposition 

Convinience (you decide which day you want your package delivered, even on weekends until midnight)

Customer segment

Online shoppers

Channels

Internet (mobile devices and the application)

Revenue stream

Customers are charged per delivery. Until a certain weight, price is fixed ($6.99) no matter day or time. Above that, special prices apply.

Cost structure

• Fixed costs : Deals with the retailers and the depot partners
• Variable : Location of delivery (gas), costs for servers, database and app (increase with traffic/users), drivers

Promotion If you convince a friend to try the service, his first delivery is free and you also get a free delivery. -> word of mouth and social media (promotion codes)

Competition Amazon one-hour package delivery

Global e-commerce statistics and facts

• http://www.statista.com/topics/871/online-shopping/

A business plan is a twenty-five to forty-page written document that describes where a business is heading, how it hopes to achieve its goals and objectives, who is involved in the venture, why its product(s) or service(s) are needed in the marketplace, and what it will take to accomplish the business aims. 

There are three essentials reasons to prepare a business plan: 

1. Entrepreneurs reap benefits from the planning activity itself

2. The plan provides a basis for measuring actual performance against expected performance.

3. The plan acts as a vehicle for communicating to others what it is that the business is trying to accomplish. 

The most common use of business plans by businesses is for funding, to attract/convince investors (and/or venture capitalists), bankers, corporate partners.

I believe business plans fail because:

• you do not take the time to do it right, prepare it for the audience you are going to be presenting the plan to 
• you business plan is static: you do not update it and you don’t really focus on the business environment in which you are operating
• you focus too much on the expected results rather than on the actual results
• there are the wrong people at certain management positions

Why is innovation important, and how is it changing?

Innovation is important because it helps a business deliver a product/service that is perceived as more valuable to the customers compared to the product/service of a competing business. Therefore, innovation in this sense might help the company increase it’s sales (and profits). However some things have changed in the last 20 years. 

The internet and the access to the global market (less trade barriers) has drastically that changed the way companies operate 

Businesses have a better access to knowledge and skills and are no longer, or at least not as strongly as in the past, constrained by their geography. However, the fact that the internet is widely used today makes it easier for buyers (whether it’s the consumer or another business) to compare products/services before purchasing them. And they also have higher requirements and expectations because they know if certain company can’t offer them want they want, they might find another one. Customers do no longer just want a product. They want a service, an experience.

Innovation is more important today because customers are more fickle, therefore, harder to retain.

Growth is important to companies and innovation enhances growth. However, this may require investment capital, that most companies don’t have. Furthermore, “the competition for growth capital is becoming tougher” due to the fact that firms compete internationally also for finance. An innovative company has more chances to attract investors. 

Today more than never, innovation is important for a company if it wants to keep up with the environment in which it’s operating because “life cycles are continually declining.” Early 2000s, Nokia was a leader in the mobile telephony industry but with the arrival of the iPhone, things changed. Nokia didn’t really innovate and/or try to move towards smartphone technology, which was fatal for the company. 

Why do you think Dell was successful when other companies trying the same model failed?

What made Dell successful was the way it sold, manufactured and delivered its products (direct sale, made-to-order). It think companies that tried that model and failed was first of all because Dell had a first-mover advantage which meant customers knew Dell for that model and not the other companies. And probably locked in suppliers and partners. Plus, computer companies didn’t see the opportunity at the right time (they kept doing business the old-fashioned way, the way that they “knew”).

According to the definition in the course material, entrepreneurship is “the process of planning, organizing, operating, and assuming the risk of a business venture”. In the US, a small business is usually a business that has less than 250 employees.

I don’t really think one should dissociate both ideas because usually as an entrepreneur, when you start a new venture, it tends to have less than 250 employees.

However, being an entrepreneur nowadays also means investing in businesses, which sometimes are already well established businesses. It is possible for an entrepreneur to buy or invest in a business that  has more than 250 employees. In this sense,  entrepreneurship would be different than owning a small business.

If I start a business, I think I will share control with others and make all the participants wealthier because today, as the owner of a business, you do not necessary have all the skills or resources. For example, if I were to launch a project and I didn’t have all the financial means, I would try to find investors or business partners.

Secondly, I may not have skills in accounting/finance or in marketing, or even to recruit new employees, therefore I would find a manager in those fields. Because he has better skills and knowledge and would do the job better than I would.

The growth issues entrepreneurial companies face in my opinion would be finding the financial resources to grow or/and convincing potential investors about the project so they put their money in it.