entrepreneurship & capital, engines that power an economy forward, nastas presentation in kazan...
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- 1. Entrepreneurship & Capital: the Engines that Power an Economy ForwardIntro note from Nastas. This presentation is the lead presentation in my MasterClass, Scaling Up Entrepreneurship, delivered in Croatia, Kazakhstan & Russia.Modules of the Master Class were presented to staff of the World Bank at theirHuman Capital & Entrepreneurship conference .You can view the outline of the Master Class at http://www.slideshare.net/TomNastas/ivi-program-scaling-up-entrepreneurship-progam-description & the calendar of topics, day/time at this link,http://www.slideshare.net/TomNastas/schedule-ivi-program-scaling-up-entrepreneurship-englishThis presentation was delivered in Kazan, Russia, 27 October 2010, to members ofthe Kazan innovation, investment and entrepreneurship community, with regionalGovernment officials attending from the Presidential Administration, Ministries ofScience, Education & Finance.Comments, questions are welcome; please contact me at [email protected]@IVIpe.com
2. Entrepreneurship & Capital:the Engines that Power anEconomy ForwardThomas D. Nastas27 October 2011Kazan, [email protected]. +1.517.899.1432Innovative Ventures Inc.Haslett, MI. USA www.IVIpe.com [email protected] 3. Entrepreneurship & $The Joy of Entrepreneurshiphttp://www.youtube.com/watch?v=T6MhAwQ64c0&[email protected] 4. Entrepreneurship & $Entrepreneurship & $: The Engines that Poweran Economy Forward MIA: take your moneyhttp://www.youtube.com/[email protected] 5. [email protected] 6. Topic #1: Entrepreneurship www.IVIpe.com [email protected] 7. Topic #2: History of [email protected] 8. Topic #3: VC in the World www.IVIpe.com [email protected] 9. Topic #4: How VentureCapital Works www.IVIpe.com [email protected] 10. Topic #1: EntrepreneurshipTest: Knowledge of Entrepreneurshiphttp://yalepress.yale.edu/yupbooks/entrepren [email protected] 11. Topic #1: Entrepreneurship What is Entrepreneurship? How can/should it be [email protected] 12. Topic #1: Entrepreneurship What is Entrepreneurship? Its a process High uncertainty, many start-upshappen by accident A means for people (dreamers?) toachieve their goals To create something where it did notexist before, to create some good, tofix something broken www.IVIpe.com [email protected] 13. Topic #1: Entrepreneurship Requires determination & perseverancesince nothing goes to plan Live with uncertainty, isolation, lack ofprogress, most of all, rejectionDont worry about people stealing your ideas.If your ideas are any good, youll have to ramthem down peoples [email protected] 14. Topic #1: EntrepreneurshipTraits & Characteristics of Entrepreneurs Passion vs. Money? Realize Goals vs. Make Dreams Come True? Born or Made? Control vs. Letting Go Planning vs. [email protected] 15. Topic #1: EntrepreneurshipPassion vs. Money? Motivation is to improve things, solvean existing problem, create some good Get rich as a result of the passion Wanting to be rich doesnt create [email protected] 16. Topic #1: Entrepreneurship Realize Goals vs. Dreamers? Cannot reach their goals through othermeans As they implement, they have thefeeling, the hunch that this thing mightbe bigger than they imagined Create products and services that createnew markets www.IVIpe.com [email protected] 17. Topic #1: Entrepreneurship Born or Made? A little of both Combination of following instincts &an environment that developed [email protected] 18. Topic #1: EntrepreneurshipControl vs. Letting Go Have control & not at the same time. Adaptable since what users wantchange as do plans. Trial & error-change their ideas as theydevelop them to give users what theywant. Deal with rejection early on; the mostfragile [email protected] 19. Topic #1: EntrepreneurshipPlanning vs. Execution Attitude & energy for action Have a general idea of the directionthey are headed Adapt not plan Strategy is a discovery process vs. aplanning process www.IVIpe.com [email protected] 20. Entrepreneurs Work [email protected] 21. Topic #2: History of [email protected] 22. Topic #2: History of [email protected] 23. Topic #2: History of VC Invested $70k (1957) ROI: $377MM (1968)IRR: 101%In $1999-$2010: [email protected] 24. Topic #2: History of VC 1969: Pension Fund [email protected] 25. Topic #2: History of VC Invested $57k (1978)ROI: $14MM (1981)IRR: 23,000%In $2007-$2010: [email protected] 26. Topic #3: VC in the World www.IVIpe.com [email protected] 27. Topic #3: VC in the WorldInternet & New Economy Business Models 1999 Vintage Funds Returned 150% Momentum & Greed replaced common sense Business Plans Funded without thorough Analysis of their Weaknesses 1st Mover = 1st [email protected] 28. Topic #4: How VentureCapital Works www.IVIpe.com [email protected] 29. Topic #4: How VentureCapital Works www.IVIpe.com [email protected] 30. $ Flows into [email protected] 31. Liquidity vs. [email protected] 32. Risk & Return www.IVIpe.com [email protected] 33. Topic #4: How Venture Capital Works The Reality (Business) of VC (How it Works)Equity is a Great Product, but:1. Its Expensive (% ownership)2. Selective-1/100 SMEs (in USA) seeking VC get $$ Need Big Markets ($50-$100MM) People (Technical, Mkting, Mgt, Support, etc.)3. Requires Capital Mkts &/or Strategic [email protected] 34. Topic #4: How VentureCapital Works ProbabilityIndividual Event 80%Company has enough $$80%Mgt. Capable & Focused 80%PD Successful80%Mfging Successful80%Competitors Behave as Expected 80%Customers Want Product 80%Pricing is Correct 80%IP Issued17%Combined Probability of SuccessLow Success Rate = Invest 1 of every 100 deals www.IVIpe.com [email protected] 35. Topic #4: How VentureCapital Works www.IVIpe.com [email protected] 36. Topic #4: How Venture Capital WorksRequirements to Receive VC1. Large addressable market or defined niche2. Uniqueness in concept or application to create LT competitive advantage (vs. 1st mover advantage) &/or Do it Better vs. the Competition3. Focused management4. Liquidity [email protected] 37. Topic #4: How Venture Capital Works Value-Added of VC (Beside $$)1. Sometimes Create the Deal2. Raise New $$$ & Add Corporate Governance, Experience & Contacts3. Keep Interests Aligned4. BOD Participation, not Manage the Firm5. Encourage Founders to Think in Kilometers, not [email protected] 38. Topic #4: How Venture Capital Works VC & PE in CIS & Russia1. Two major investors EBRD & US Govt2. Enterprise Funds in CEE3. Enterprise Funds in CIS/Russia4. EBRD Funds in CEE, CIS & Russia5. Approximately $4 Billion Committed, 75%+ from the Multilaterals (w/IFC & DFIs)6. Growth in Oligarch Funds/[email protected] 39. Topic #4: How VentureCapital WorksVC to PE in Russia Today1. 1st in VC (1994-1999). Deals w/VC Characteristics. Migrated to PE financing/growth in Post Financial Crisis2. Expansion Stage Financing, US$2-$20 million/deal with limited syndication3. Deals = For Domestic Economy, FMCC, F&B, Retailing, Real Estate, Wholesaling, Transportation & Western Successes Transplanted to Russia, Sabarro Pizza www.IVIpe.com [email protected] 40. Topic #4: How Venture Capital WorksEmerging Interest in Tech-Russia1. Intel Capital, AddVenture, etc.2. One-off Deals by PE Investors, Barings3. Russian Govt Initiatives-Regional VC, RVC & Rusnano4. Multiple Infrastructure Groups Emerging; doing Conferences, Exhibitions, facilitating Collaborative R&D, etc. www.IVIpe.com [email protected] 41. Topic #4: How VentureCapital WorksWhy Little /$ Goes to Russian Tech1. Capital Seeks the Highest Rate of Return Strong Growth in Non-tech, Retailing,Distribution, FMCC, F&Bs, etc.2. Competition from Stock Mkt & Real Estate3. Competition from Israel, US, Europe, etc. www.IVIpe.com [email protected] 42. Topic #4: How Venture Capital WorksMost Tech Opts in Intl MktsWhere Demand IsButGaining Access is ExpensivePenetration & Growth Takes Much [email protected] 43. Topic #4: How Venture Capital WorksMost Tech Opts in Intl Mkts Where Demand Is Gaining Access is Expensive Penetration & Growth Takes Much TimeRussian Deal Flow is too Young to Meet Intl Test Instead, Target Domestic Market, e.g., Tech for Oil/Gas Industry, Auto Components, Systems Integration www.IVIpe.com [email protected] 44. Topic #4: How Venture Capital WorksFACT: Russia Has Good Ideas: Ideas Deals1/200 SMEs seeking VC get /$: Why Reject?Undeveloped OpportunityLack of Uniqueness/No Competitive AdvantageToo much $$$, too much time & too little rewardPeople (mgt./employees)Lack of Transparency, No Clear Title/Ownership of IP www.IVIpe.com [email protected] 45. Topic #4: How VentureCapital Works Whats Common Here? www.IVIpe.com [email protected] 46. Topic #4: How VentureCapital WorksSummaryEntrepreneurship & VC are linkedVC only successful if entrepreneurs [email protected] 47. Where is the Technology? 48. Technology In Many Places! Just Look & DefineSlaughter Raising Genetic Engineering& Breeding ButcherDistribution, Storage &Retail LocationsProcessing- Ham, KielbasaDelivery16-19 November 2009www.IVIpe.com [email protected] 49. Thomas D. [email protected] Tel. +7.985.923.4727 Tel. +1.517.899.1432Innovative Ventures Inc. Haslett, MI USA23 June 2010 50. Case Study Discussion &Analysis: HotmailWhat are objectives (implicit/explicit)?What decisions (implicit/explicit) must s/hemake/face?What problems, opts, & risks does s/he [email protected] 51. Case Study Discussion &Analysis: Hotmail Does the opportunity fit Hotmails corecompetencies? Did they think imaginatively about thebusiness model? Did their product change the lives of theircustomers? What are the learning curve lessons fromHotmail that you can apply to your worksituation? www.IVIpe.com [email protected] 52. Case Study Discussion &Analysis: Hotmail What was their value creation model? Did they create value? For whom? Were the macro-economic andenvironment factors in Hotmails favor?Did demand exist? In their targetmarket(s)? What about customers abilityto pay? What about future [email protected] 53. Case Study Discussion & Analysis: Hotmail What changes do customers need to maketo use the service? How did partners/competitors impacttheir model & chance for success? Were they undercapitalized? www.IVIpe.com [email protected] 54. Case Study Discussion &Analysis: HotmailWhat evidence do I have to help make the decision?Is the evidence reliable/unbiased? Can I improve it?What alternative courses of action are available?What criteria should I use to evaluate the [email protected] 55. Case Study Questions to Ask YourselfWhat action should I take?How should I convince others in the case & theclassroom that my approach is best?What did I learn from this case?How does it relate to past cases & my [email protected]