Opportunity Cost of Capital for Venture Capital Investors and ...
New Venture Opportunity
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Transcript of New Venture Opportunity
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NEW VENTURE OPPORTUNITY
"Let him that would move the world, first move himself”
Socrates
Ian Hardcastle - Zhang Guo – Daniel Caballeros – Nicole Camacho – Kimberly Cafarelli
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Recognizing Opportunity: The Key factors that turn a novel Idea into a booming business
Good Opportunities address important market needs.
Any Big Problem is a Big Opportunity: No Problem, no solution, no company.
Find a “Long wave”, immutable trend that will last .
Important to match capabilities and interests
Mobilize Resources
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Emerging Markets Innovations in
Energy
Information Technology
Bio-Engineering
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Successful New Ventures
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Venture Capitalists Standpoint
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Financing a New Venture
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New Venture Risk Not all risk can be removable
Entrepreneurs are people that are willing to take risk
Focus on managing risk instead of taking risk
Two types of risk in a new venture: The risk of the uncertainty surrounding
the business The Market Risk Operational Model Risk Financial Model Risk
The risk of what is at stake if the business fail Opportunity Risk Financial Risk
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Two Types of Risk External
Risk The risk
surrounding the business
Internal Risk The risk inside
the business
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External Risk The Market risk
A large enough market to support the business Whether the market is growing What trend exist in the industry How competition is structure Distribution of products/services
Operational Model Risk A business’s internal operation to deliver goods and services
to customers effectively Financial Model Risk
The “number” issue that determines if a business can work or not
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Internal Risk Opportunity Risk
A risk that comes if the business fails and it allows you to do something else with your time and money
Financial Risk The tangible value that you and the investor
lose if the business fails
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Marketing a New Venture Strategic Planning Rely on subjective
assumptions & qualitative marketing research Interview potential
clients & relevant business partners
Information to be collected in order to decrease level of “uncertainty” Macro environment Competitive trends Consumer
behavior trend Partial SWOT
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Marketing To-Do’s Business Model
Branding
Business Website or Webpage
Communication
Public Relations
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Business Model Mission statement
Target audiences
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Branding Develop a logo or
company name
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Business Websites “About us”
section highlighting the business’s mission statement
Keywords for search optimization
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Communication Send emails or
letters to clients, influential third-parties, or customers
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Public Relations Social Media
Strategy
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Managing a Ventures Growth
• Growth is one of the most essential elements to make your new venture successful.
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Two Popular Business Growth Models:
Organization Life Cycle Model
Churchill & Lewis’ Growth Model
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L. Greiner’s Business Model
Introduced in 1972
As new ventures grow they are faced with different opportunities, threats and changes
Each stage must go through a “crisis” in order to move to the next stage of growth.
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Flaws in the Greiner Curve Lacks important elements that are
needed for a business to grow such as: Networking and making relationships with
clients and other vendors Securing finances of the company Keeping up with new technologies Does not take into consideration the size of
the business; one dimensional
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Churchill & Lewis’ Business Growth Model
Revised version of Greiner’s model.
Introduced in the early 1980’s
Published in the Harvard Business Review in 1983
Covers more specifics and detail than Greiner’s model, especially relating to management.
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Churchill & Lewis’ Business Growth Model
Each stage breaks down into different management factors: Managerial style Organizational
structure Extent of formal
systems Major strategic
goals Owner’s
involvement
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Sources http://www.growthmanagementconsulting.com/liability.html http://www.tameer.org.pk/images/The_Five_Stages_Of_Small_Business_Growth.pdf http://managingnewventures.wikispaces.com/file/view/TMT+Change.pdf/30131267
6/TMT%20Change.pdf http://www.inc.com/encyclopedia/organizational-life-cycle.html http://www.getbusymedia.com/small-business-stats/