MAN 320F: Exam 3 with Verified Answers
Annual sources of Start-up Funding - Answer -Venture Capital: $18 billion State funds: $4 billion
Angel Investors (wealthy individual): $35 billion Angels: 90% of outside equity of start-ups?
The Three F's (Family, Friends, Fools): $60 billion
Potential Angels in the U.S. - Answer -U.S. Millionaires, Estimates of informal investors, Center for Venture Research-Active Angels, Investors in angel groups
T/F: Angel investors are more likely to invest in a company that is a 2 hour drive away, they want a hands-on approach, want to do this "in their back yard". - Answer -TRUE.
Where do I get my money? - Answer -Pension funds Insurance companies Endowments Foundations High net worth individuals
Arorian's Track Record - Answer -40% of the deals fail
40% of my deals do okay- nothing great
20% of my deals make up for the 80% that don't really do all that well
What is Venture Capital? - Answer -o Equity investments made to fund the launch, or early development, or expansion of a private, and usually quite young, company. o Offsetting the high risk, the investor takes is the expectation of higher than average return on the investment.
Who will a VC fund? - Answer -An entrepreneur- someone who assumes the financial risk of beginning and managing a new venture. The venture can be based on a totally new idea, a new way of doing something, or attempting something no on eels has done before.
What does a "perfect" investment opportunity look like? - Answer -o An experienced management team o A great idea/concept that is proprietary o Something that cannot be duplicated o A product/service that 7 billion humans will buy
o A great rate of return on investment
o Intellectual property that is protected by patents and trademarks
o Zero risk
The Three Laws of Business - Answer -It will always cost more than you thought it would It will always take longer than you anticipated Things change- continuously
What really matters? - Answer -The Market Opportunity
How do you find the "right" VC? - Answer -Need to talk to allied professionals such as lawyers, accountants, and entrepreneurs. Remember! It's not just what you know, but... Find the VC's that have invested or specialize in your industry Many large corporations have dedicated VC funds to invest in companies strategic to their core business.
What do you need to prepare for VC? - Answer -An honest business plan with the risks, challenges, issues and opportunities clearly identified with projected financial statements What key team members you need to hire and where they will come from Clear strategic goals and your plans for achieving those goals Potential customers are always a welcoming sign A path towards liquidity
A few things to know about VC's - Answer -When you make a promise- they will hold you to it. The penalties can be stiff. Most VC's want to make at least 10 times their money. As an entrepreneur- remember that the name of the game is not "what you start with" VC's will not make emotional decisions because of the number 1 rule
o You can only lose your money once but make it 1,000 times
How important is corporate culture? - Answer -Perhaps the single most important facet. How we manage our human energy Keeps employees actively and passionately engaged Rich corp culture leads to innovation Creates and supports the mission, vision and values.
Michael Porter on Strategy - Answer -o Developing a unique position in the marketplace
o About gaining a competitive advantage o Org culture doesn't beat strategy o Org culture IS strategy
Annual sources of Start-up Funding - Answer -Venture Capital: $18 billion State funds: $4 billion
Angel Investors (wealthy individual): $35 billion Angels: 90% of outside equity of start-ups?
The Three F's (Family, Friends, Fools): $60 billion
Potential Angels in the U.S. - Answer -U.S. Millionaires, Estimates of informal investors, Center for Venture Research-Active Angels, Investors in angel groups
T/F: Angel investors are more likely to invest in a company that is a 2 hour drive away, they want a hands-on approach, want to do this "in their back yard". - Answer -TRUE.
Where do I get my money? - Answer -Pension funds Insurance companies Endowments Foundations High net worth individuals
Arorian's Track Record - Answer -40% of the deals fail
40% of my deals do okay- nothing great
20% of my deals make up for the 80% that don't really do all that well
What is Venture Capital? - Answer -o Equity investments made to fund the launch, or early development, or expansion of a private, and usually quite young, company. o Offsetting the high risk, the investor takes is the expectation of higher than average return on the investment.
Who will a VC fund? - Answer -An entrepreneur- someone who assumes the financial risk of beginning and managing a new venture. The venture can be based on a totally new idea, a new way of doing something, or attempting something no on eels has done before.
What does a "perfect" investment opportunity look like? - Answer -o An experienced management team o A great idea/concept that is proprietary o Something that cannot be duplicated o A product/service that 7 billion humans will buy
o A great rate of return on investment
o Intellectual property that is protected by patents and trademarks
o Zero risk
The Three Laws of Business - Answer -It will always cost more than you thought it would It will always take longer than you anticipated Things change- continuously
What really matters? - Answer -The Market Opportunity
How do you find the "right" VC? - Answer -Need to talk to allied professionals such as lawyers, accountants, and entrepreneurs. Remember! It's not just what you know, but... Find the VC's that have invested or specialize in your industry Many large corporations have dedicated VC funds to invest in companies strategic to their core business.
What do you need to prepare for VC? - Answer -An honest business plan with the risks, challenges, issues and opportunities clearly identified with projected financial statements What key team members you need to hire and where they will come from Clear strategic goals and your plans for achieving those goals Potential customers are always a welcoming sign A path towards liquidity
A few things to know about VC's - Answer -When you make a promise- they will hold you to it. The penalties can be stiff. Most VC's want to make at least 10 times their money. As an entrepreneur- remember that the name of the game is not "what you start with" VC's will not make emotional decisions because of the number 1 rule
o You can only lose your money once but make it 1,000 times
How important is corporate culture? - Answer -Perhaps the single most important facet. How we manage our human energy Keeps employees actively and passionately engaged Rich corp culture leads to innovation Creates and supports the mission, vision and values.
Michael Porter on Strategy - Answer -o Developing a unique position in the marketplace
o About gaining a competitive advantage o Org culture doesn't beat strategy o Org culture IS strategy
