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