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instruction manual step-wise guide to start n e-business
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Star-up activities
Requires
Fund
3
Bootstrapping Self-funding
Finding unique and inventive ways to acquire resources without borrowing money
Informal investors Friends
Family members
Angel investors Professional Investors Venture capitalists
4
Friends and family members
Know and trust entrepreneur
Stand by during tough times
Invest in entrepreneur rather than business idea
Downside is potential risk to relationships
▪ Business misunderstandings
▪ Business failure
Angel investors Individuals with money and time who enjoy the excitement of early-
stage investing
Not reluctant to taking risks
Primarily interested in business idea not the entrepreneur
May offer business advice, mentoring or access to other investors
Disadvantages
▪ Required to pass a very rigorous screening process
▪ Some angel investors focus on a single industry- such as technology
▪ Typically invest relatively small amounts
India’s Largest Angel Network : http://www.indianangelnetwork.com/Connecting Indian Entrepreneurs and Angel Investors :
http://www.investmentnetwork.in/?gclid=CKTki8Txj8ACFUw2aQodKzwAkA List of Angel Investors: www.startbizindia.in/angel_investors_india.php
Venture capitalist firms
Professional investment company
Provide funds for startup businesses in exchange for equity position in the new business
Raise funds from endowments, insurance companies, and pension funds
Bringing Indian entrepreneurs & investors together: http://www.venturegiant.co.in/
Seven VC funds that fuel India’s e-commerce business:
http://articles.economictimes.indiatimes.com/2014-05-26/news/50098927_1_idg-
ventures-india-tiger-global-lee-fixel
VCCircle events: http://www.events.vccircle.com/
Take many forms▪ Traditional partnerships of two or more wealthy
individuals or professionally managed investment groups
▪ Government-sponsored investment companies
▪ Corporate funding programs by high-tech companies
Advantages▪ Provide access to hundreds of millions of dollars
▪ May offer extensive knowledge about a specific industry
▪ May offer access to important industry contacts
Disadvantages Focus is often on a specific industry or geographical area
Generally require a large equity position in a new business in exchange for an investment
Often require a seat on the board of directors and to be actively involved in major business decisions
A business plan may not get notices unless it is submitted through a trusted party
First meeting with investors is a sales meeting
Bring a pitch document
Short marketing document based on Executive Summary portion of business plan
▪ Highlights market need
▪ Shows how startup meets that need
▪ Indicates potential profits
▪ Shows how management team can make it happen
Learn as much as possible about potential investors before the pitch meeting
Be prepared for investor questions about
Business idea
Target market
Competitors
Critical marketplace issues
Do not fake answers; if you don’t know, simply say so and move on
During the pitch meeting
Be on time
Be prepared
Be enthusiastic
Bring all necessary equipment and documents
Differentiate yourself and management team from your competitors
Create the feeling that your e-business idea is a viable, exciting investor opportunity
Sometimes called Business Accelerators Non-profit organizations (usually sponsored by local governments,
businesses and universities) Commercial businesses (that nurture startup businesses) By offering
Fee-based business development and administrative services
Providing such services for a percentage of ownership equity in the start-up
Offers various development, administrative, and support services
▪ Office space
▪ Telecommunication hookups
▪ Reception and conference room facilities
▪ Computer networks
▪ Advisory services
▪ Access to potential investors
Advantages
“One-stop solution” for many startup problems
Easy access to professional advice
Venue for interacting with other startups
Disadvantages
May be hefty fees for services
Giving up share of ownership equity to others
Non-profit business incubators
Generally cooperative venture between a university and local community
Examples
▪ Austin Technology Incubator (ATI)
▪ Advanced Technology Development Center (ATDC)
▪ Houston Technology Center
▪ Illinois Technology Enterprise Center (ITEC)
▪ Women’s Technology Cluster (WTC)
National Entrepreneurship Network (NEN)
Commercial business incubators
Businesses that provide incubation services for a fee and usually a large equity position
Examples
▪ Batavia Industrial Center (BIC)
▪ Idealab
▪ eCompanies
MICA
Self-incubation
Participating in a members-only group of entrepreneurs
▪ Share practical experience
▪ Access to contacts
▪ Sell or barter products and services with members
Example
▪ Starve Ups
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