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ENT 526 Week 9

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Ryerson University
Entrepreneurship and Strategy
ENT 526
Sean Wise

Week 9 Review  Questions to ask as an investor o Sales figures – use them for business acumen  See if the person is reasonable o Skin in the game – how much your willing to put into your company o Halo effect – being associated with large brands o What are you going to do with the money?  Use of proceeds  Want to know the effects of the use  Needs to add value o A startup does not have a business model  Gets worked out during the first year  Eliminate assumptions  Moving from the unknown to the known  Go to friends and family when the risks are high o They believe in you  Risk/Reward Ratio higher for family, business angels, VC because they take more risk  Price is set by the customer o You don’t set the value for your company  30% Rule – never take more than 30% and never take less than 30% (EXAM) o Risk level is the only thing that changes o Average across the whole board o Don’t take more than 30% because no one would work o Founders do not want to work if you take more  Don’t need 50% to have control  Unanimous shareholders agreement o 50+1 vote wins when there is no agreement o Keep people together  3 T’s o Team o Traction – how much your selling, industry growth o Technology  Angel vs. Venture o Angel investors uses their own money o VC uses pooled money  “Professional Investors”  Private equity money  Larger amount o Angel investors are your mentors  Experience  Passion  More skin in the game  Interest  More at risk, more involved  Smaller amount  Debt structure o Debt can be credited o Tax purposes  Billy bob is looking for 500 000 to expand his business, sells software, wants money to grow his business o VC because he growing o Business is set in place Lecture  SME’s – small and medium sized enterprise  High growth firms – startups  Personal savings – 66% of startups use personal savings  Good  reflection point  Great  Some companies only stay good  3 Circles - Jim Collins o Hedgehog concept: o 1 - What you are deeply passionate about o 2 – “What you ACTUALLY can be the best at” o 3 – What drives your economic of your business  KPI – key performance indicator  Average revenue per user (ARPU)  Profit per x  Good is the enemy of great o Whe
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