Promising Startups.ppt

? Amar Bhide 2000 ? Amar Bhide 2000 Promising Startups Propositions about initiatives Approaches, problems vary with initiatives Research base 100 Inc. 500 founders Mail survey 300+ critical biographies 20 Case studies Today ‘Promising’ startups Corporate initiatives VC backed startups Speculations about small open economies awkward phraseology Two engineers in a garage $500 capital Foot fault indicator, harmonica tuner audio-oscillator pricing: $54.40, ‘54 40 or fight’ Big money paradigm Experienced founders Careful market research Business plan Top notch team Venture capital Rod Canion, Jim Harris, Bill Monroe Plan to take on IBM Ben Rosen + $20 m Experienced managers $100 m sales Improvised startups1. Meager endowments dictate opportunities Don’t have track-record… …don’t have breakthrough ideas… 50% + replicated previous employers idea or, “undifferentiated” response to opportunities 6% claimed “no substitutes” 3 patents Student papers/’celebrated’ entrepreneurs …cant raise professional capital Inc. 500 startups: 80% self financed Median start-up capital = $10,000 Under 5% raised VC funding Lack of track record + ideas + capital == Niche markets 60% + local Vs. Small competitors Not uniformly distributed many excluded sectors Mining Textiles Process industries Automobiles (1) Hotels, Airlines Restaurants (1) Bio-technology (1) Proposition:Entrepreneurs w/meager resources thrive in niche markets with highly incomplete information: Example: Computer Industry 1975-??? planning/research: costs benefits Projects with highly incomplete information ? limited data, costly delays Capital constraints Limited downside Example: Eaglebrook Plastics 3. Securing resources: customers, employees, suppliers... Securing resources: customers, employees, suppliers... Special deals and benefits Mimicry Framing Broad search Incremental commitments Second-tier resources Today’s talk: ‘Promising’ startups Corporate initiatives VC backed startups Speculations ab