Creating a Winning E-Business Second Edition Getting Your E-Business Off the Ground Chapter 4
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 Identify issues important to venture capital investors Creating a Winning E-Business Second Edition Chapter 4
Creating a Winning E-Business Second Edition, Chapter 4 2 Learning Objectives ▪ Describe the financing issues associated with an e-business startup ▪ Discuss the role of informal investors in an e-business startup ▪ Identify issues important to venture capital investors
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
Creating a Winning E-Business Second Edition, Chapter 4 3 Learning Objectives (continued) ▪ Pitch your e-business idea to investors ▪ Discuss the advantages and disadvantages of business incubators
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
Creating a Winning E-Business Second Edition, Chapter 4 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
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 formal investors Friends Family members Angel investors Creating a Winning E-Business Second Edition Chapter 4
Creating a Winning E-Business Second Edition, Chapter 4 5 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
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
Creating a Winning E-Business Second Edition, Chapter 4 6 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
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 S1M 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
Creating a Winning E-Business Second Edition, Chapter 4 7 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
Startup Financing(continued) bond Since 1994, the Band has acetated the investment or EXPERT CAPITAL AND mentors Valleys best seed stage VENTURE COUNSEL startup companies. /HO WE INVESTMENTS MADE IN THE LAST TWELVE MONTHS The Band of Angels is Sicon Volleys oldest organzation sta dedicated exclsively to funding and advising seed stage startups, The Band i a formal goup of 100 formar and currert hagh tech executives who ar CHIPWRIGHTS new, cutting edge, startup companies. Ban VITAL STATSTICS members have founded companes such as ARFAS OF EXPERTISE FIGURE 4-1 Band of Angels Creating a Winning E-Business 8 Second Edition Chapter 4
Creating a Winning E-Business Second Edition, Chapter 4 8 Startup Financing (continued)
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Creating a Winning E -Business Second Edition, Chapter 4 9
Cast stud Read the "Of Angels and E-Maircase 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 10 Second Edition Chapter 4
Creating a Winning E-Business Second Edition, Chapter 4 10 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?
