個案總覽

"Financing Entrepreneurial Ventures" introduces key issues involved in the financing of entrepreneurial enterprises. The Reading begins by examining how business models shape external financing requirements. It then contrasts the choice to bootstrap with the option to raise external funds, as well as the traits of debt versus equity investment. Readers learn about the different types of equity investors-including angels, VCs, and strategic investors-and follow an entrepreneurial venture's path through the financing stages. The Reading also examines how entrepreneurs can adjust business models to match financial conditions, and how they can reduce financing needs through alternative models such as partnerships. Finally, the Reading covers emerging funding models-such as crowdsourcing and accelerators-and the global aspects of entrepreneurial finance. There are 6 Interactive Illustrations included in the Reading: "Calculating a Cumulative Cash Flow Curve," "Asset Intensity Ratio," "Building a Cap Table," "How Investor Expectations and Target Returns Drive Company Ownership," "Payouts from Simple Equity and Convertible Investments," and "Seed Note Ownership and Value."

In this note, we examine the extent to which venture capital is adequately positioned for the rapid commercialization of clean energy technologies in the United States. The need for a revolution in clean energy is driven not just by environmental consequences of energy use, but also by the need for energy security, to address growing concerns about a crisis in the balance of payments, and as a potentially important source of domestic jobs. Our premise in this note is that a key aspect of such widespread change is that these issues cannot be "solved" by a single technology. Rather, technological changes will have to be pervasive and will require a whole range of different products and processes to come to market. Some of the technological progress will come from incremental innovations that do not depend on venture capital.

Endeavor Global was a nonprofit that for 15 years had worked to nurture entrepreneurship in emerging markets by selecting local high-impact entrepreneurs for mentoring and aid in scaling up their businesses from committed local business leaders. In summer 2012, Endeavor received an invitation to replicate its model in Miami, Florida, and the Endeavor board was meeting to debate the value of such a move. At issue were questions of organizational mission and the relevance of Miami, as well as branding, funding, and focus. The invitation had come in the midst of a major expansion effort by Endeavor into new emerging markets and threatened to disrupt those efforts and tax a new hybrid funding model which Endeavor was implementing. Founder Linda Rottenberg with the support of her board must determine the implications of possibly opening in Miami on Endeavor's resources and mission? How could Rottenberg justify to overseas affiliates a choice to invest in a first-world city?

It was September 2013, and NOWaccount Network Corporation (NOW®) co-founders John Hayes and Lara Hodgson were putting the final touches on the presentation deck for their annual shareholders' meeting. Along with co-founder Stacey Abrams, the pair had designed NOW's business model three years ago, and the company was at a critical juncture. NOW offered a program-called NOWaccount-that provided working capital to small businesses by converting their trade receivables almost immediately into cash. Founded in December 2010, Atlanta, Georgia-based NOW was serving clients in nine states. With 2013 year-to-date revenue of roughly $100,000, NOW was financed with $2.5 million of founder, and friends and family equity. NOW's wholly-owned, not-for-profit special purpose entity (SPE), Trade Credit Guaranty Corporation (TCGC), purchased approved receivables, funding 90% of the invoice face values by electronic transfers into clients' bank accounts. As of September 2013, TCGC had purchased more than $13 million of small business trade receivables from more than 40 clients. Once TCGC reached a scale of approximately $150 million of funds in use for receivable purchases, the co-founders planned to tap into the securitization market for capital by issuing asset-backed securities (ABS), collateralized by a pool of receivables, much like the credit card industry. ABS would provide TCGC ongoing capital at a lower cost. The question the co-founders confronted was whether they should get to the $150 million securitization threshold by piecing together smaller pools of capital from credit unions and possibly smaller banks (a slower approach but one that did not involve dilution because it was all debt finance), or by accepting larger chunks of capital from a major global bank and a private equity firm, getting them much closer to the threshold but at the cost of significant dilution (35%) as these financiers were also looking for a combination of equity and warrants in NOW.

Young, and particularly high-growth ventures often need to raise significant external finance, since their internal cash flow is usually insufficient to support the investments needed to grow. Although raising equity from venture capital or angel investors is the most well-known source of external finance for high-growth ventures, many entrepreneurs, particularly small business owners, rely on debt and other non-equity sources of capital to finance their ventures, either because equity capital is not available to them or because they want to avoid the ownership dilution and governance constraints associated with equity investments. This note focuses on these non-equity sources of financing for entrepreneurs, paying particular attention to how the emergence of new technologies in risk assessment have expanded their availability for young firms.

In early 2010, Naval Ravikant and Babak Nivi posted a list of angel investors on the Venture Hacks blog as a resource for founders looking for funding prior to seeking venture capital. The list quickly evolved into AngelList, a separate matchmaking platform for founders and investors to make early stage fundraising more efficient. By June 2013, AngelList had garnered substantial media attention, and was used by many high profile angel investors and venture capitalists. It had approximately 100,000 startups and 18,000 accredited investors. Since the site was launched, almost 40 startups on AngelList had been acquired, and over 2,000 startups had been funded. For most entrepreneurs, posting a profile on AngelList had become as commonplace as setting up a personal profile on Facebook or LinkedIn. Most recently, the site added Invest Online, a new product that in partnership with SecondMarket, allowed accredited investors to make small investments-as low as $1,000-in startups at the same terms as larger investors.</p><p>While the co-founders were proud of AngelList's growth, as of June 2013, they were not charging for its use and had not yet determined its business model. Ravikant and Nivi wondered if they should reconsider and have AngelList apply for broker dealer status so it could charge transaction fees, but they were reluctant to enter what they considered a regulatory minefield. The recently passed JOBS Act was expected to relax constraints around crowdfunding, and Nivi and Ravikant knew that would be a logical extension for AngelList as well. Finally, they wondered if they should avoid any potential regulatory issues altogether and instead focus on generating revenue primarily from recruiting and other ancillary services.

Sidharth Gupta, CEO of Getit Infomediary Ltd, had just received a term sheet from Helion Venture Partners (Helion), one of India's independent venture capital firms, offering to invest Rs 200 million in return for an equity stake in the company. His dream of transforming Getit from a regional print company into a digital company with broad geographical reach was within grasp. However, Gupta had to act fast; Helion's term sheet would expire in a fortnight if unexecuted. Bank finance and trade credit had tided Getit through tough times in the past, and Getit still had a Rs 250 million bank line to draw on. Should he take the venture capital investment? And if so, implications would this have for his family business and for him personally?

John Gilleland, CEO of TerraPower, returned to his office after a lengthy meeting with potential investors. It was October 2012, and TerraPower was in the process of raising a $200M Series C round to finance the ongoing development of its next-generation nuclear reactor. Though early in the fundraising process, Gilleland noted that this most recent conversation was similar to conversations with other interested cleantech growth equity investors. The conversations circled around a common theme: "This is the biggest idea that's ever been presented at our partners' meeting. We love what you're doing, but it's not right for us as an investment." Outside of raising money from typical growth equity and infrastructure funds, Gilleland could partner with a government and/or form a joint venture with an existing nuclear power player. Reliance Industries as an investor in TerraPower could provide an entry point into the fast growing Indian market. At the same time, Gilleland and Gates had talked with China National Nuclear Corp. about a possible cooperation with TerraPower. Whom should Gilleland call next?

This note introduces convertible notes in angel financing. It begins by delineating the differences between a priced and non-priced round. It then describes a specific example of a convertible note, with attention paid to technical details regarding valuation caps.

This case describes a new venture attempting to bring early-stage entrepreneurial financing to Finland and other Nordic countries. Entrepreneurship is taking off in Finland, an area that historically has had little venture capital or high-growth start-up activity, but a gap remains for seed-stage financing. The founders are evaluating the best way to structure their private equity fund to reflect their own assets and abilities and the needs and resources of the entrepreneurial scene in the Nordics. The case evaluates whether to organize as an accelerator, a micro-VC fund, an incubator, a normal VC fund, or as a hybrid.

For the second time in fourteen months, Christopher Owen, the second-generation owner of Owen's Precision Machining (OPM), found himself running out of cash. Owen wondered what he was doing wrong. How much additional money would he need to raise to get OPM through the next twelve months, and what could he change now to fix his company for the long term? Owen's thoughts also turned to the conversation he had last month with two Harvard Business School alumni who were searching for a manufacturing business to acquire after spending the early part of their career in manufacturing at GE's Aircraft Engine division in Lynn, MA. Their offer of $1.1 million, or 6.9x times 2011 EBITDA of $159,292, was a pleasant surprise, but Owen was not interested in getting out of his family's business. Given the current cash flow situation, should Owen reconsider the acquisition offer?

This case examines the powerpoint presentation that Ranjith Kumaran, founder of the start-up PunchTab, Inc., is using for his investment pitches to venture capital firms. Students can discuss the materials that Kumaran has included, his presentation style, and what they would retain or remove from the presentation.

Siddharth Kapoor, the Founder and CEO of H-Soft Mumbai, reflected on his meetings as he walked out of VC Ventures' offices in Mumbai. After a few months of intensely pitching his startup to several different investors, he finally had a term sheet in hand. Despite this huge milestone, Kapoor knew it was only the start of a long process of raising money. He only had three days to get back to Sharma and indicate whether he would like to initiate the diligence process. While he was familiar with some of the terms venture capital investors put into their contracts, many others were completely alien to him. Which terms were important? Which ones should he focus on negotiating? He also knew that money was only part of what the venture capital investors brought to the table. Was VC Ventures the right partner for his business? Kapoor knew he had a busy few days ahead of him as he thought through all of these questions before getting back to Vikram Sharma.

Siddharth Kapoor, the Founder and CEO of H-Soft Mumbai, reflected on his meetings as he walked out of VC Ventures' offices in Mumbai. After a few months of intensely pitching his startup to several different investors, he finally had a term sheet in hand. Despite this huge milestone, Kapoor knew it was only the start of a long process of raising money. He only had three days to get back to Sharma and indicate whether he would like to initiate the diligence process. While he was familiar with some of the terms venture capital investors put into their contracts, many others were completely alien to him. Which terms were important? Which ones should he focus on negotiating? He also knew that money was only part of what the venture capital investors brought to the table. Was VC Ventures the right partner for his business? Kapoor knew he had a busy few days ahead of him as he thought through all of these questions before getting back to Vikram Sharma.

Siddharth Kapoor, the Founder and CEO of H-Soft Mumbai reflected on his meeting as he walked out of VC Ventures' offices in Mumbai. After a few months of intensely pitching his startup to several different investors, he finally had a term sheet in hand. Despite this huge milestone, Kapoor knew it was only the start of a long process of raising money. He only had three days to get back to Vikram Sharma and indicate whether he would like to initiate the diligence process. While he was familiar with some of the terms venture capital investors put into their contracts, many others were completely alien to him. Which terms were important? Which ones should he focus on negotiating? He also knew that money was only part of what the venture capital firm brought to the table. Was VC Ventures the right partner for his business? Kapoor knew he had a busy few days ahead of him as he thought through all of the questions before getting back to Sharma.

For some time, 1366's co-founders, Frank van Mierlo and Ely Sachs, had faced a choice, which was now made all the more stark: 1366 could expand to produce silicon wafers itself, raising the required capital from "friendly" investors and building shipment volume slowly, or 1366 could accelerate its market entry dramatically by partnering with the Asian manufacturers that had begun to dominate the world-wide solar industry. While accelerated growth was attractive to 1366 and its current investors, the company believed that it would face considerable risks if it were to expose its intellectual property to the "wrong" partners. 1366 had no intention of losing control of its technology, but given the pace of innovation and the active role of governments in the solar industry, van Mierlo and Sachs feared this might not be a race that could be won by the cautious.

In 2011, SecondMarket was an online platform that facilitated secondary transactions of illiquid assets, including private company stock. This case explores reasons for the decline in small-cap IPOs in the United States from the 1990s to the 2000s and how the emergence of SecondMarket provided liquidity to privately held companies like iContact, an email and social marketing software-as-a-service [SaaS] company.

In their second year, two Mexican HBS MBAs joined forces to start a search fund based in Mexico City. They had raised money to acquire an existing private company in Mexico with an initial enterprise value between $5 million and $15 million. Just seven months after raising the fund, they were about to close a deal on a target company, but the seller wants to renegotiate.

PunchTab was a Silicon Valley startup founded in 2011 that was developing an Internet-based turnkey customer loyalty program for website owners, mobile applications developers, and brands. Founder/CEO Ranjith Kumaran must make strategic decisions about how to fund PunchTab's early operations and growth given the many options available: individual angel investors, super angel funds, incubators, and seed funds inside traditional venture capital firms.

Using the financing history and exit choices of a German clean-tech startup as a lens, this case explores the reasons why venture-backed entrepreneurship is much lower in Germany that the US, despite a robust SME sector and large-corporate innovation in Germany. It also shows the tight link between investor incentives and a startup's product market strategy, including differences between "pure-play" VCs and corporate venture capital investors.