Entrepreneurship 101
Kit Needham Not all Startups are the Same
Small Business/Life-Style Investment/Exit Ø Known business Ø Untested business examples to learn from model with a high Ø Funded by banks or degree of uncertainty stockholders Ø Funded by investors Ø Business plan (angels and VCs) Ø Sustain a particular Ø Business model level of income Ø Grow big quickly and Ø Provide dividends or sell (exit) increased stock price Ø Provide a 5x-10x return to the investors The Players
• Incubators • Accelerators • TBEDs Incubators
• Where the commercialization plan ‘hatches’ – Mentoring/coaching/guidance – Access to materials – Introductions to advisors, domain expertise – May provide space – May provide micro-grants • Goal – get initial seed funding Pittsburgh: A Community of Innovation FOR INVESTMENT/EXIT START-UPS
Idea Startup Early Growth Rapid Growth EXIT Development
O L Y M P U S
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NIVERSITIES N N N S Incubators U O T V I student innovation student A T T U I T 0 E N leveraging $$ billion$$ research and Accelerators
• Fixed term, cohort-based programs – Provide mentorship and educational components – Highly competitive to get in – Get seed investment ($20k-$50k) in exchange for equity • Goal – “Demo Day” to attract follow-on investment • Examples: AlphaLab/Gear, Idea Foundry, Tech Stars, Y Combinator, DreamIt Ventures, etc Pittsburgh: A Community of Innovation
Idea Startup Early Growth Rapid Growth EXIT Development
O L Y AlphaLab M SOFTWARE P U AlphaLab Gear S HARDWARE & ROBOTICS I F
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E U A N Idea Foundry D HEALTHCARE & R LIFE SCIENCES Y ENTERTAINMENT &
EDUCATION I I SOC. ENTERPRISES CCELERATORS CCELERATORS NIVERSITIES N N WATER
A N S Incubators U O T THRILLMILL V I student innovation student A T T U DemandCo I T 0 E N leveraging $$ billion$$ research and Pittsburgh: A Community of Innovation
Idea Startup Early Growth Rapid Growth EXIT Development
O L Y AlphaLab INNOVATION M SOFTWARE WORKS P U AlphaLab Gear IT S HARDWARE & MEDICAL ROBOTICS DEVICES I F
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E U A N Idea Foundry Idea D HEALTHCARE & Foundry R LIFE SCIENCES Y ENTERTAINMENT &
EDUCATION I I SOC. ENTERPRISES
N N CCELERATORS NIVERSITIES WATER
N S A Incubators U O T V I THRILLMILL student innovation student A T T U THINKTIV I T 0 E N PITTSBURGH LIFE SCIENCES GREENHOUSE leveraging $$ billion$$ research and MONEY/FUNDING Investors • INVESTORS – FRIENDS & FAMILY (& FOOLS) – CROWDFUNDING – ANGELS and ANGEL GROUPS – SUPER ANGELS – VENTURE CAPITALISTS
Angels vs VCs
Angels Venture Capitalists Ø High net-worth Ø Create a fund using individuals i.e. their other people’s money own money) Ø Tend to invest locally Ø Seek deals from Ø Tend to invest early everywhere and often ($25k - $50k) require them to relocate Ø Often form Angel nearby Groups to research and co-invest in deals (e.g. BlueTree) Angels: Majority of Startup Funding
$12.4B
$9.5B $9.8B $9.9B $8.4B
$1.0B $0.45B* $0.22B*
*es mated Angel Investors 2011 Venture Capital 2011
• $22.5B • $29B • ~66,000 deals • ~3,750 deals • 42% seed/startup • 3.5% seed/startup • 55% early stage • 68% later/expansion capital • ~ 318,500 individuals • Total 791 firms (not all active)
Sources: UNH Center for Venture Research, PwC MoneyTree and NVCA MONEY/FUNDING Terms Terms - Seed Funding - Series A, B, etc. - Valuation - Convertible Debt - 10x return - Exit (Sale or IPO – Initial Public Offering) People • Steve Blank – 4 Steps to Epiphany “Get out of the building” • Eric Reis – The Lean Startup – MVP (Minimal Viable Product) – Feedback Loop Build
Learn Measure People and Terms
• Steve Blank – “Get out of the building” • Eric Reis – “The Lean Startup” • Business Model Canvas
Pittsburgh: A Community of Innovation Funding for investment/Exit Startups
Idea Development Startup Early Growth Rapid Growth EXIT
ANGELS BlueTree Allied Angels Keiretsu Forum Funds startups *FOUNDATIONS Funds startups
VCs: Adams, Birchmere, PEP, Draper, etc. Funds startups FEDERAL GOVT FUNDING SBIRS/STTRs Funds startups *FEDERAL GOVERNMENT STATE: DCED Funds research Funds IW and subs, PLSG
CROWD Local: URA FUNDING Funds Startups
PUBLIC PRIVATE SECTOR; SECTOR
Pittsburgh: A Community of Innovation LifeStyle and Investment/Exit Startups
Idea Development Startup Early Growth Rapid Growth Maturity
Chatham’s Center for Women’s Entrepreneurship (CWE) Small(CWE Business Development Centers- Pitt; Duquesne Innovation Practice Institute –Pitt Law School (Start Smart) with CMU
Education
Pittsburgh: A Community of Innovation LifeStyle and Investment/Exit Startups
Idea Development Startup Early Growth Rapid Growth Maturity
Chatham’s Center for Women’s Entrepreneurship (CWE) Small(CWE Business Development Centers- Pitt; Duquesne
Innovation Practice Institute –Pitt Law SCORE School (Start Smart) with CMU CWE IEE - Pitt
Powerlink
Education Mentoring
Pittsburgh: A Community of Innovation LifeStyle and Investment/Exit Startups
Idea Development Startup Early Growth Rapid Growth Maturity
Chatham’s Center for Women’s Entrepreneurship (CWE) Small(CWE Business Development Centers- Pitt; Duquesne
Innovation Practice Institute –Pitt Law SCORE School (Start Smart) with CMU CWE IEE - Pitt
Powerlink Riverside Center for Innovation Revv I, II, III?
Startup Town Former Paramont Studio The Beauty Shop
Education Mentoring Space/Support Services
Pittsburgh: A Community of Innovation LifeStyle and Investment/Exit Startups
Idea Development Startup Early Growth Rapid Growth Maturity
Chatham’s Center for Women’s Entrepreneurship (CWE) Small(CWE Business Development Centers- Pitt; Duquesne
Innovation Practice Institute –Pitt Law SCORE School (Start Smart) with CMU CWE IEE - Pitt
Powerlink Riverside Center for Innovation Revv I, II, III?
Startup Town Former Paramont Studio The Beauty Shop
Tech Shop Pgh Tech Council
Education Mentoring Space/Support Resources Services
Q&A [email protected] Pittsburgh: A Community of Innovation FOR INVESTMENT/EXIT START-UPS
Idea Startup Early Growth Rapid Growth EXIT Development
O L Y AlphaLab M SOFTWARE P INNOVATION U AlphaLab Gear S WORKS HARDWARE & ROBOTICS I F IT
MEDICAL D O
E U DEVICES A N Idea Foundry D HEALTHCARE & R LIFE SCIENCES Y ENTERTAINMENT &
EDUCATION I I SOC. ENTERPRISES CCELERATORS CCELERATORS NIVERSITIES N N WATER
A N S Incubators U O T THRILLMILL V I student innovation student A T T U THINKTIV I T 0 E PGH LIFE SCIENCES GREENHOUSE N
leveraging $$ billion$$ research and ANGELS BlueTree Allied Angels GOVERNMENT FED STATE SBIRS DCED Keiretsu Forum VCs: Adams, PEP, FUNDING FOUNDATIONS Birchmere, Draper,