The Art of Start in JordanIEEE workshop 7 Oct 2012

Ahmad Takatkah & Muhammad Arrabi

Who Is This?

Who Is This?

Who Is This?

What’s common between these companies?

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Why Are You Here?

Lifecycle of a Startup

• Evenings, friends

Idea

• Evenings• Find mentor

Business Plan

• Self funded• Evening work

Customer Validation

• Seed funding• Total focus

Solution Validation

• VC funding• A small company

Scale

• IPO/Acquisition

Big Company

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Many Iterations

Contents

• Introduction• Idea• Business Plan• Execution• Investment• Team• Resources

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THE IDEA10

The Market – it’s all about the market• Is the market growing?• Do you understand the market? Experience

in it?

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Technical vs. Business

• You must address customer pains – paying customers preferably

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Question for the Audience

• Let’s assume you work as a Kitchen Designer.• A Lady comes to you, and asks you to design

her kitchen.• What would be your first question to her?

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Who is your target customer?• B2C• B2B• B2E (enterprise)• Global vs. Regional vs. Local

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5 Forces of Competition

Market Competitors

Customers (Bargain Power)

Barrier to Entry

Suppliers (Bargain Power)

Substitute Products

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Blue vs. Red Ocean

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Blue vs. Red Ocean (examples: iPad, AirBnB, 99Designs, etc…)

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Too Many Ideas Problem

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Contents

• Introduction• Idea• Business Plan• Execution• Investment• Team• Resources

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BUSINESS PLAN20

Business Model Canvas

• http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf

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Let’s Take an Idea and Work with It!

1

2

Revenue

Partners & Operations

Costs

Customers

3

<

Value Propositi

on

1- Value Proposition

• What value do you provide to customers?

• Which of their problems are you solving?

• What need are you satisfying?

• What services/products are you offering to what target group?

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2- Customers

• Customer Segments– For whom are you creating value– Who are your most important customers?

• Customer Relationships

• Channels

• Revenue Streams

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3- Partners & Operations

• Key Partners• Key Activities

– Hire people, pay salaries– Offer services, cost on you

• Key Resources• Cost Structure

– How cost grows as activities grow

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Is it a profitable business?

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1

2

Revenue

Partners & Operations

Costs

Customers

3

<

Value Propositi

on

Contents

• Introduction• Idea• Business Plan• Execution• Investment• Team• Resources

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Contents

• Introduction• Idea• Business Plan• Execution• Investment• Team• Resources

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EXECUTION31

Fail Fast & Fail Often

• Any idea or product can fail for many reasons

• Many of these reasons you can test early on

• The main goal of a startup in the beginning is to perform these tests

• If a test fails this means you have to change the idea a bit (enhancing) or a lot (pivoting).

• Testing your idea reduces risk, and thus allows you to get more funding.

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Validate Customers Need

• Test & verify that customers really have this need – want to do this

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Validate Initial Solution

• Try the item with customers. Get feedback. Enhance. Iterate very quickly. Verify that are welling to pay for it (if it will not be free).

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Validate Ability to Scale

• This is usually late stage for startup

• Once you need to scale up, certain practices & operations will have to be replaced

• But will these work as good as previously? Verify this. As you verify more, you can expect to reduce risk, and grow business.

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Now you are a big company• (and this is a different presentation)• Recommended reading about big companies:

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INVESTMENT37

Funding vs. Investment

Investment Stages – like Car Gears

Lifecycle of a Startup

• Evenings, friends

Idea

• Evenings• Find mentor

Business Plan

• Self funded• Evening work

Customer Validation

• Seed funding• Total focus

Solution Validation

• VC funding• A small company

Scale

• IPO/Acquisition

Big Company

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Many Iterations

There are many Sources of Capital• Self Finance • Friends and family • Crowdfunding• Bootstrapping, • Competitions, • Incubators, • Grants, and Supporting Organizations • Strategic Partners • Customers and suppliers • Banks, Islamic Banks• Angels Investors • Venture Capital Funds, • Corporate Venture Funds and corporate incubators (Spinoffs)• Private Equity Funds • IPO

Crowdfunding – Kickstarter.com

Angel Investors• Angels?

• they understand your situation,

• they're a source of contacts and advice.

• New concepts• Exit Strategy• Valuation

• Angel Groups/clubs.• How to find angels?

– Personal introductions• Deal terms• Don't believe it till you get

the check (never stop looking for angels)

Venture Capital

• Professional firms, they look for investments• They invest in around 20 companies every round (3-7)

years• An investment should promise around 10x return• Usually only 1 or 2 companies succeed really big (100x),

and 5-6 die, and the others break even of bring some money.

• Expect a long process, detailed, with lots of information requests.

Contents

• Introduction• Idea• Business Plan• Execution• Investment• Team• Resources

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TEAM46

Team

• Choose the super team– This is the team that will take

your revolutionary idea to theworld.

• Equity over time– Let’s say you are 2 people– Give each 50% of company, vesting over 4

years!– This means, after first year, each partner gets

¼ of their stock (e.g. %12.5). After second, another ¼ vests.

– If a partner leaves early, he loses any unvested stock.

• Pay with Equity to Lawyers, Accountants, etc.– Starting to happen in Jordan

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Contents

• Introduction• Idea• Business Plan• Execution• Investment• Team• Resources

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RESOURCES49

Common Internet Business Models• advertising• ecommerce• lead generation• sponsorships• freemium• in-app purchase• B2B Products, Service, & Subscription

Types of Startups

• Copier• Exploiter • Niche leader • Franchiser / Distributor • Business Innovator • Technology Innovator • (lifestyle business vs. high-growth

business)

VC’s in region

• N2V• IV Holdings• Dash Ventures• Humming Bird Ventures• Ideavelopers• MENA Ventures• MEVP • Wamda (Abraaj Capital)• Sinbad Ventures• STC Ventures• MBC Ventures 52

Incubators in region

• Oasis500 (www.Oasis500.com)• iPark (www.ipark.jo)• Business Innovation Center (www.bic.jo)• Several universities have them (JUST, Yarmouk, etc.)• Outside Jordan

– Flat 6 Labs (Cairo)– Bader (Riyadh)– Tahrir2 (Alexandria)– SeedStartup (Dubai)– Seequnce (Beirut)– Tenmou (Bahrain)– 360 Accelerator (Dubai)

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Startup Support Programs in Jordan• BDC Course: http://www.empretecjordan.org/• Microsoft BizSpark – free software (work $200k)• AmmanTT.com – free lectures & networking• Bedaya.jo – Jordanian Angel Network• Development for Employment Fund def.gov.jo • www.EndeavorJordan.org mentorship• www.Injaz.org.jo training• www.InjazAlarab.org training• irada.org.jo Support for startups• www.Jedco.gov.jo EU Support and funding• www.kafd.jo King Abdullah II Fund• www.MigrateMENA.com consulting services• www.MITarabcompetition.com Business Plan Competition• www.qrce.org Queen Rania Center for Entrepreneurship• www.yea.com.jo Young Entrepreneurs Association• www.intaj.net INT@J Association of Computer Companies 54

Books & Education

• Lean Startup by Eric Ries• Startup Owner’s Manual by Steve Blank• Business Model Generation by multiple

authors• Anything you Want by Derek Sivers• http://www.success.ae/

• MIT Entrepreneurship courses: http://ocw.mit.edu/courses/entrepreneurship/

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Thanks for inviting us

Ahmad TakatkahManaging Partner, Sinbad

Ventureswww.SinbadTheVC.com

@SinbadTheVC

Muhammad ArrabiChief of Staff, N2V.com

www.MuhammadArrabi.com@MRArrabi

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Thank You