Entrepreneurship & Startup Financing

Early-Stage Financing

• Family, friends, and fools are good sources of early-stage financing.

Start-Up Failure

• Relationship conflict is the most likely reason for start-up failure.

Immateriality of Software

• The immateriality of software means that software products have zero marginal cost.
• It also means companies need to compete in ecosystems.
• First-mover advantages also exist for all software products.

Leveraged Buy-Outs

• In a leveraged buy-out, the acquiring company can purchase another firm larger than by taking on a substantial amount of debt.

Performance of Sustainable Ventures

• Performance is best captured by its triple-bottom line.

Effectuation Key Parts

• Control through goal definition is not a key part of the idea of effectuation

Dominant Standard

• The existence of the dominant standard should fundamentally affect what type of entrepreneurial project will be more successful.

Janice Fraser's Regret

• In hindsight, Janice Fraser heavily regretted having started an entrepreneurial career.

Guest Lectures

• Waterpreneurs was a topic from a guest lecture.

Jakob Assmann's Mountain

• Jakob Assmann showed and referred to Brauneck mountain in class.

Mohammed Yunus on Social Business

• According to Mohammed Yunus, a dollar has more than two lives in a social business.

Porter's Five Forces

• Two of Porter's five forces are bargaining power of customers and the threat of substitution.

Patent Filing Likelihood

• A food industry firm would be least likely to file for a patent on their core product.

Management Buy-Out

• The process of current managers leveraging the firm via debt to acquire it is called a management buy-out.

Virgin Startups

• Virgin Shoes is not a startup by Richard Branson or an employee of Virgins.

Jensen Huang on Pricing

• According to Jensen Huang, competition determines the price of a product.

Corporate Entrepreneurship Detriment

• Emphasis on quick wins would be most detrimental to a corporate entrepreneurship initiative.

Greiner's Model Crisis

• Following Greiner's model, the founder should be most likely to leave the company or be displaced by an external hire in the crisis following the direction phase.

Creativity Technique

• Brainforcing is not a creativity technique.

Alex Krapp's App

• The label of the app under development which Alex Krapp showed in his guest lecture was GinSquirrel

Porter's Five Forces

• The threat of substitution is the most difficult element of Porter's Five Forces to assess.

Value Proposition

• The unique offering a firm promises to its key customers is also called the value proposition.

Network Effects

• Network effects can explain the source of first-mover advantage.
• They explain the existence of winner-takes-all-markets.
• They explain the evolution and success of companies like Skype or Facebook.

Polarstern IT Startup Classification

• Polarstern could be an IT start-up because it likely uses software and IT systems to manage its energy distribution and customer interactions.
• However, its core business is energy, not software development.
• It could be classified as a tech-enabled utility company.

Overlapping Elements

Two overlapping elements are creativity and passion

• Creativity involves generating new and valuable ideas, which is essential for entrepreneurs to innovate and differentiate themselves.
• Passion fuels the dedication and perseverance needed to overcome challenges.

Richard Branson Discussion

• While Richard Branson is a successful entrepreneur, the world needs diverse role models with different approaches to business and ethics.
• Not everyone should emulate the same style.

Entrepreneur vs. Small Business Owner

• Similarities: Both take risks and manage businesses.
• Differences: Entrepreneurs focus on innovation and growth, while small business owners aim for stability.
• Entrepreneurs often seek venture capital, while small business owners rely on personal funds or loans.

Kickstarter's Operation

• Kickstarter is a crowdfunding platform that allows creators to solicit pledges from backers for projects.
• They offer a platform for funding and visibility and make money by taking a percentage of the funds raised if a project reaches its funding goal.

Branson/Gates Criticism

• They represent extreme cases of success that are difficult to replicate, and their business practices may not align with all ethical standards.

IT Startup Environmental Characteristics

• Rapid technological change requires IT start-ups to be agile and adaptable.
• Network effects can be more pronounced in IT, leading to winner-takes-all dynamics.

Venture Growth Difficulties

• Loss of control as the company scales and difficulty in maintaining the initial culture.

Complementary Assets

• Complementary assets are resources needed to support the commercialization of an innovation.
• Apple's success with the iPhone relied on its iOS ecosystem and App Store.

Greiner's Model Insights

• Growth creates predictable crises.
• Management styles need to evolve as companies grow.

Branson/Gates Criticism

• They represent extreme cases of success that are difficult to replicate.
• Their business practices may not align with all ethical standards.

Tesla Value Creation

• Tesla creates value by offering high-performance electric vehicles that reduce environmental impact and provide a technologically advanced driving experience.

Greiner's Autonomy Crisis

• The crisis of autonomy occurs when a growing company needs more centralized control, which can stifle individual initiative.
• It can be resolved through delegation and decentralization.

Entrepreneurial vs. Established Firms

• Entrepreneurial firms are typically more agile and adaptable.
• They have a higher tolerance for risk compared to established firms.

Bank Loan vs. Venture Capital

• Bank loans typically involve less dilution of ownership.
• They also have more flexible repayment terms compared to venture capital.

Alex Krapp Lecture

• Two overlapping elements are resilience and adaptability.
• Resilience is the ability to bounce back from setbacks.
• Adaptability is the capacity to adjust to changing circumstances, both crucial for navigating the unpredictable entrepreneurial journey.

Entrepreneurial Intentions

• Entrepreneurial intentions refer to an individual's willingness to start a new business.
• They are typically high when individuals perceive opportunities, have the skills, and feel confident in their ability to succeed.

Causation vs. Effectuation

• Causation involves setting a goal and then finding the means to achieve it.
• Effectuation starts with available means and explores possible goals.
• Causation is predictive, while effectuation is adaptive; causation is suitable in stable environments, while effectuation thrives in uncertain ones.

Difficulties upon Venture End

• Emotional distress and financial losses can be significant challenges when ventures fail.

Explanation of Effectuation

• Effectuation is an approach that emphasizes using available means to create new possibilities. Alex Krapp, for example, may have leveraged his existing network and skills to pivot his business when faced with unexpected challenges or opportunities.

Entrepreneur vs. Small Business Owner

• Similarities: Both take risks and manage businesses.
• Differences: Entrepreneurs focus on innovation and growth, while small business owners aim for stability; entrepreneurs often seek venture capital, while small business owners rely on personal funds or loans.

Difficulties during Venture Growth

• Maintaining culture: As a venture grows, it can be challenging to preserve the initial values and culture.
• Coordination and Communication: Larger ventures often struggle with efficient coordination and communication.

First-Mover Advantage

• First-mover advantage refers to the competitive edge a company gains by being the first to enter a market.
• Amazon gained a significant advantage in e-commerce by being one of the first major online retailers.
• This is possible to attain if the company has strong IP protection, can establish strong brand loyalty, and creates high switching costs for customers.

Growth Strategies

• Penetration: Apple increases sales of existing products (iPhones) in existing markets.
• Market Development: Apple expands into new markets (e.g., China).
• Product Development: Apple introduces new products (e.g., Apple Watch).
• Diversification: Apple expands into new industries unrelated to its core business (e.g., Apple TV+ content streaming).

Triggers for Entrepreneurial Activity

• Parents who are entrepreneurs is not considered a trigger of individual entrepreneurial activity

Business Plan Function

• Business plans are a communication tool.
• They act also as a roadmap.
• A business plan is also a working document
• All of the above.

Bottom Line Usage

• The double bottom line should be used primarily by social entrepreneurships.

Appropriability Regime boils down to

• The efficacy of the appropriability regime boils down to the nature of the technology and the strength of legal protection mechanisms.

Key Trait of Successful Entrepreneurs

• According to Tom Conrad a key character trait is humility.

Mechanisms to Protect

• In most industries, the most effective mechanisms to protect a valuable idea is/are secrecy.

Successful Growth of Young Firms

• Leveraging existing networks is a good example showing the importance of for the successful growth of young firms

Role of the Middle Manager

• According to Jason Huang, the role of the middle manager should cover all options: allocating the company's resources, identifying new opportunities and picking competitive battles.

IT Industry Characterized

• The IT industry is characterized as an ecosystem.

Alex Krapp's Firm

• For the digital lifestyle is Alex Krapps firm SoulSurf currently developing an

Patent Filed

• 21st century software companies would likely file for patents.

Bottom-Line Measurements

• To measure success in sustainable entrepreneurship, firms can draw on the concept of the triple bottom-line

Virgin Groups

• Virgin Shoes was never a part of the Virgin group

Entrepreneurs & Failure

• According to Tina Seelig, if an entrepreneur never fails, that would be a bad thing, because the entrepreneur had not taken enough risk.

Smartphone App Developed

• Presize.ai has developed a smartphone app aimed at helping online retailers reduce the amount of returns in online clothes shopping

Type of Leveraged Buy-Out

• The company's current management obtaining loaned money acquires the company from its current owners, making it a type of leveraged buy-out. *

Financing Dependence

• The less you want to become dependent on others, the more you should rely on as bootstrapping is a key source of financing

Entrepreneurially-Managed Firms vs. Traditionally-Managed Firms

• Risk Orientation: Entrepreneurial firms are more risk-seeking, while traditional firms are risk-averse.
• Decision-making: Entrepreneurial firms have decentralized decision-making, whereas traditional firms are characterized by centralized decision making.

HUB Business Model

• The HUB offers a co-working space and community for social entrepreneurs. They make money through membership fees and event hosting. May be tech startup.

Entrepreneurs vs. Inventors

• Focus: Entrepreneurs focus on commercialization, while inventors focus on creation.
• Risk: Entrepreneurs take calculated risks, while inventors may be less concerned with market risks.
• Reward: Entrepreneurs seek financial rewards, while inventors may prioritize recognition.
• Skills: Entrepreneurs need business acumen, while inventors require technical expertise.

Business Plans today

• Business plans help to secure funding and provide a roadmap for growth.
• They are also helpful for aligning the team and communicating the vision to stakeholders.

Conditions to attain first-mover advantages

• Lack of complementary assets: Without necessary supporting resources, the advantage erodes.
• Rapid technological change: Quick innovations can make the initial advantage obsolete.
• Weak intellectual property protection: Imitators can quickly replicate the innovation.
• Example: Webvan failed despite being an early online grocery delivery service.

Richard Branson, Steve Jobs, or Mark Zuckerberg discussion

• Should:* They inspire innovation and job creation.
• Should not:* Their practices may not always be ethical or sustainable. The world needs more ethical and socially responsible entrepreneurs.

VK Energie IT Startup

• It likely uses software for optimization. However, its core business is energy. It is a Tech-enabled energy optimization company because it uses IT to improve energy production.

Venture Capital vs. Bank Loan

• Venture capital provides larger sums of capital and brings expertise and networks.

Complementary Assets

• Complementary assets are resources needed to support the commercialization of an innovation. For a pharmaceutical company, these include regulatory approvals and distribution networks.

Key Features of Effectuation

• Effectuation involves using available means to create new possibilities. Alex Krapp may have used his surfing expertise and network to start SoulSurf, adapting his approach as he learned more.

Idea of First Mover Advantage

• First-mover advantage is the competitive edge gained by being first to market.
• Shopshop (if applicable) could achieve this with strong brand recognition and network effects, provided they can build a large user base quickly and create high switching costs.

Different Growth Strategies

• Penetration: Facebook increases usage among existing users.
• Market development: Facebook expands into new countries.
• Product development: Facebook introduces new features like stories.
• Diversification: Facebook invests in VR (Oculus).

Quiz about securing venture capital, startup financing, growth strategies, and conflict resolution in startups. The quiz also covers ethics, sustainable practices, and leveraged buyouts.