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Vdocuments - MX Chapter 1 Introduction To Entrepreneurship Bruce R Barringer R Duane Ireland
Vdocuments - MX Chapter 1 Introduction To Entrepreneurship Bruce R Barringer R Duane Ireland
Introduction to
Entrepreneurship
Bruce R. Barringer
R. Duane Ireland
• Corporate Entrepreneurship
– Is the conceptualization of entrepreneurship at the firm
level.
– All firms fall along a conceptual continuum that ranges
from highly conservative to highly entrepreneurial.
– The position of a firm on this continuum is referred to as its
entrepreneurial intensity.
• Innovative posture
Financial rewards
Women Entrepreneurs
• There were 6.2 million women-
owned businesses in 2002 (the
most recent statistics available)
• This number was up 20% from
1997.
• There are a growing number of
organizations that support and
advocate for women-owned
businesses.
Young Entrepreneurs
• Innovation
– Is the process of creating something new, which is central to the
entrepreneurial process.
– Several studies have found that small businesses outperform
their larger counterparts in terms of obtaining patents.
• Job Creation
– Small businesses are the creators of most new jobs in the U.S.,
and employ half of all private sector employees.
– According to a Kauffman Foundation survey, 92% of
Americans say entrepreneurs are critically important to job
creation.
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 1-22
Entrepreneurial Firms’ Impact on Society
and Larger Firms
• Impact on Society
– The innovations of entrepreneurial firms have a dramatic
impact on society.
– Think of all the new products and services that make our
lives easier, enhance our productivity at work, improve our
health, and entertain us in new ways.
• Impact on Larger Firms
– Many entrepreneurial firms have built their entire business
models around producing products and services that help
larger firms become more efficient and effective.
Initial Public
Offerings
10-25
Business Angels
1 of 2
• Business Angels
– Are individuals who invest their personal capital directly in
start-ups.
– The prototypical business angel is about 50 years old, has
high income and wealth, is well educated, has succeeded as
an entrepreneur, and is interested in the startup process.
– The number of angel investors in the U.S. has increased
dramatically over the past decade.
10-26
Business Angels
2 of 2
10-27
Venture Capital
1 of 3
• Venture Capital
– Is money that is invested by venture-capital firms in start-ups
and small businesses with exceptional growth potential.
– There are about 650 venture-capital firms in the U.S. that
provide funding to about 2,600 firms per year.
• Venture-capital firms are limited partnerships of money managers
who raise money in “funds” to invest in start-ups and growing firms.
• The funds, or pool of money, are raised from wealthy individuals,
pension plans, university endowments, foreign investors, and similar
sources.
• A typical fund is $75 million to $200 million and invests in 20 to 30
companies over a three- to five-year period.
10-28
Venture Capital
2 of 3
10-29
Venture Capital
3 of 3
10-30
Initial Public Offering
1 of 3
10-31
Initial Public Offering
2 of 3
Reason 1 Reason 2
11-32
Initial Public Offering
3 of 3
Reason 3 Reason 4
11-33
Sources of Debt Financing
10-34
Commercial Banks
• Banks
– Historically, commercial banks have not been viewed as a
practical sources of financing for start-up firms.
– This sentiment is not a knock against banks; it is just that
banks are risk adverse, and financing start-ups is a risky
business.
• Banks are interested in firms that have a strong cash flow, low
leverage, audited financials, good management, and a healthy
balance sheet.
10-35
SBA Guaranteed Loans
1 of 2
10-36
SBA Guaranteed Loans
2 of 2
10-37
Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall 1-38