Lecture Note__New Venture Startup_MBA_Alto_04-1 Purpose of Entrepreneurship

New products andprocesses, newinitiatives *Personal advisory boardLearning byInteractingSource: Entrepreneurs in Every Generation, 2016* Why family business members have an advantage intheir entrepreneurial development.©ProfessorDavidChoiDifferent Ways Entrepreneurship Can Be Learned (2)® Dr. David Choi from LMUStartupTeamMemberDevelop through (experiential/action) learning©ProfessorDavidChoiSample Entrepreneurial Mindset Training• Innovation Introduction of products, processes or procedures that are new to the context.Lecture on action principles, creativity exercises

Note: If you are going to get a loan or investment, you will need to assume that you are using thefunds to grow your business.Financing PlanFinancing Plan (early startup)$2,000 Develop prototypes and test market Personal savings$10,000 Develop initial batch of products and sell on Instagram Personal savings$100,000 Manufacture with 3rd party and sell on Shopify & Amazon Friends and FamilyAmount Purpose Source of FundsFinancing Plan (Plan for a SW company)Use of Proceeds (Required)How will you use the financing?Software company• Tech salaries: $ 330,000• Other salaries: $ 160,

Purposeful Research ?There are, of course, innovations that spring from a flash of genius. Mostinnovations, however, especially successful ones, result from aconscious, purposeful search for innovation opportunitiesPeter Drucker, “Discipline of Innovation”, HBRLMUEntrepreneurshipWhere do great ideas come from - Discipline ?The key to innovation is not `being creative´ or this ad-hoc-Eureka-light bulb-brainstorming-stuff-happensmodel. It is the systematic, disciplined, rigorous approachto innovation.Craig Wynett, Corporate New Ventures, Procter & Gamble, HBR Case Study

StartupProcess©ProfessorDavidChoiAssume an AppWhat are the steps to building it?©ProfessorDavidChoiDesigning Your App©ProfessorDavidChoiTransitioning into an Entrepreneurial CareerKept the job that she hatedWent to MBA program with the goal to start a companyTook Entrepreneurship class in which she invented the productDeveloped the product and started selling onlineSales grew from a few hundred dollars a month to tens of thousands of dollars per monthQuit her jobGot into big box retailers©ProfessorDavidChoiAssume a Software Product, say for Small BanksWhat are the steps

Venture 1 Jan-78 $518 $634 5,520 32,378 16.9% $3,063 $0.06Founders Jul-78 $426 $1.080 4,736 37,378 12.7% $3.362 $0.06Venture 2 Sep-78 $704 $1,764 2,503 39,970 6.3% $11,218 $0.28Venture 3 Dec-80 $2,331 $4.095 2,400 43,306 5.5% $46,061 $0.97IPO Dec-80 $101,200 $105,295 4,600 54,215 8.5% $1,192,730 $22.00Note: At IPO, VCs owned about $200M worth of equity with a total of $3.5M investmentNot 100% sure this is really AppleCap Table Example (w/Employee Options):ONSET investment into TallyUpFounder Round Seed $750K Additional $250K OptionsShares %OwnedShares % Owned Shares % Owned Shares