Crafting Suctctess: Exiploring

the Exssental Components

of Well-Designed New
Ventures and the Start-Up
Business Proctess

FIN 4103 - Entrepreneurial Finance

 Learning Objecties
 Describe the process of new venture
formation from inception to harvesting
 Distinguish the various stages of new
venture development
 Understand how the business plan is
related to strategic planning and
implementation
 Recognize that studying entrepreneurial
finance leads to better investment and
financing decisions

FIN 4103 - Entrepreneurial Finance

Exntrepreneurship and the Exntrepreneur
• What is an Entrepreneur?
• R. Cantllon – bearer of risk in proiision of capital
• J. B. Say – shifer of resources to higher producttiity
• J. Schumpeter – innoiaton as disturbing status quo
• Knight – directs resources in the presencte of unctertainty
• P. Drucker – creatng something new, transmutng ialue
• Modern iiew
• Pursuit of opportunites to ctombine and redeploy
resourctes without regard to cturrent ownership or ctontrol
of the resourctes

3
Entrepreneurship is Multidimensional
• The entrepreneur must:
1. Perceiie an opportunity to create ialue by
redeploying society’s resources
2. Formulate a plan to efectiely manage and acquire
essental resources
3. Execute a structured course of acton to facilitate the
desired transformaton
4. Collect/ hariest the rewards/ benefts arising from
the innovative eforts.

4
Exctonomict Downturns and
Exntrepreneurship
• Benefts of startng a ienture in a downturn
• lower opportunity cost
• competton may be less intense
• easy to hire high quality employees
• Famous companies started during economic downturns

5
 Acttiity 1_ Global
Diferencte in Supportieness for
Startng and Doing Business
Indiiidual Acttiity: Ease of Doing
Business rankings: Search for the
UAE Rank via

https://archive.doingbusiness.org/en/
Globalizaton of Exntrepreneurship
rankings
Entrepreneurship now comes from all oier the world and is driien by

increased competton for ideas and for fnancing

technological adiances: communicatons and computers

goiernment policies and subsidies

N 4103 - Entrepreneurial Finance 6

Types of Exntrepreneurship
• Replicatie iersus innoiatie: reshapes
industries and has the potental to add huge
ialue to economies
• e.g. Google, Intel, Facebook, and e-Bay

• Opportunity-based iersus necessity-based

• Corporate Venturing (projects requiring large

and complex research teams ; lengthy
deielopment tmes; ...)

• Social Venturing: address a social issue

N 4103 - Entrepreneurial Finance 7

 Stages of New Venture Deielopment

 SOURCE: ENTREPRENEURIAL FINANCE: STRATEGY, VALUATION, AND DEAL STRUCTURE, by Janet Kiholm Smith, Richard L. Smith, and Richard T. Bliss, © by Stanford Uniiersity. 8
 Financtial Performancte and the Stages of
New Venture Deielopment

• Deielopment

• Start-up

• Early-growth

• Rapid-growth

• Exit

9
 Acttiity 2_ The
Sequencte of New
Venture Financting
Group Acttiity: Discuss the iarious stages of
fnancing in the lifecycle of a startup.
 Bootstrapping
 Seed fnancing
 R&D fnancing
 Start-up fnancing
 First-stage fnancing
 Second-stage fnancing
 Third-stage fnancing
 Mezzanine fnancing
 Bridge fnancing

N 4103 - Entrepreneurial Finance 1

The New Venture Business Plan
 Focus on the purposes and uses of the plan
 Identfy and support key assumptons
 Highlight critcal factors for success or failure
 Delineate milestones so users can eialuate success
 Include fnancial projectons to test the plan, commit the
entrepreneur, and facilitate negotaton

 Difering from an established business

 uncertainty about assumptons
 milestones and real optons
 used for raising capital

N 4103 - Entrepreneurial Finance 1

 Acttiity 3: Outline of a Typictal Business Plan
Group Acttiity: Discuss and present your project
progress considering :
Executie Summary
I. Background and Purpose of Venture
II. Market Analysis
III. Products and Seriices
IV. Deielopment, Producton, and
Operatons
V. Organizaton and Management
VI. Ownership and Control
VII. Financial Informaton

Why do you require

Use the Business Model Canvas:
Business Model Canias Template Download funding for your
Business Model Canvas – Download the Ofcial Template (strategyzer.com)

N 4103 - Entrepreneurial Finance ienture/ startup? 1

 What is
Exntrepreneurial
Financte?
• All fnancial aspects of entrepreneurship and iniestng
in entrepreneurial ientures
• Decision making related to undertaking and iniestng in
new ientures
• Eialuatng strategic choices from the perspectie of ialue
creaton
• Financial modeling to assess cash needs and for ialuaton
• Structuring deals and incenties to create maximum ialue
• All stages of new ienture deielopment — start-up to
hariest

N 4103 - Entrepreneurial Finance 13

 Why Study Exntrepreneurial Financte?
Exntrepreneurs – Unlikely Iniestors (VCs, angels,
to be funded unless you ctorporate VCs) – Unlikely to be
ctan answer questons like: suctctessful unless you ctan assess

 How much cash do you

need?
• The likelihood that the
 How much do you think
your ienture is worth?
ienture can be successful
• The cash needs of the
 How can you defend your
reienue projectons? ienture
 What do you think you can
• Reasonable terms for
achieie in the next year? iniestng

N 4103 - Entrepreneurial Finance 1

 Thank You!

N 4103 - Entrepreneurial Finance 1