2005-06Dare to Dream Grants

Sponsored by the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial

Studies

Agenda

• What is the Dare to Dream program• Two types of grants• Applications and review• Moving beyond Dare to Dream

Dare to Dream is a program to encourage students in the thoughtful development of their own businesses

and business concepts.

The team leader must be an RSB current student. Team members can

be from outside RSB and/or the University.

Development Stages & ZLI ProgramsDevelopBusiness

GrowBusiness

Ideate BusinessAssess BusinessOpportunityIdentification

IntegrationBusiness Launch

& AcquisitionLiquidity Event

Manage Turn-around

Frankel Fellows Program

Michigan GrowthCapital Symposium

Wolverine Venture Fund

ZLI Business Challenge &Intercollegiate Competitions

Entrepreneurial MAPdomestic & international

opportunities

Marcel Gani Internship Program (including JumpStart!)

Dare to Dream Grant Program

Assessment Integration

Williamson – Early Stage

Commercialization

Emerging Industries: in-depth exploration of an industry and family of technologies emphasizing entrepreneurial opportunity

Entrepalooza: overview of entrepreneurship across multiple industries, business stages and entrepreneurial concepts

Dare to Dream Grants are not

• A competition

• An endorsement of the business or business concept

• An endorsement of the management team

• For academic credit

Dare to Dream Grants

• Encourage the creation, launch and development of new student-led businesses

• Develop student entrepreneurial skills

Dare to Dream Grants are

Awarded to businesses and concepts for which the student-led team has convinced ZLI of the – Innovation– Value– Motivation

Encouragement for students to– Take risks– Explore opportunities– Expend effort and dedicate time

Dare to Dream Applications• Assessment Grants force answers the

questions– Is there enough “there” there to justify

assembling a full plan?– Are market need, proposed solution and

target market in line?• Integration Grants drive the team to

– Dive deeper into the issues of formation and launch

– Assemble full business plan to address all concerns of launching and growing a business

Dare to Dream Grants and Business Stage Activities

IdeateBusiness

AssessBusiness

OpportunityIdentification

IntegrationBusinessLaunch

•Can you articulate the innovation in your idea?

•Do you have a solution that delivers benefits and solves market pain?

•Are you in the process of deciding what your business model will be? •Have you identified the initial market?

•Have you articulated the value proposition?

•Do you understand how this company fits within the industry?

•Do you have a preferred market entry strategy?

•Have you conducted your target market research?

•Are initial financial and cost estimates complete?

•Do you know the industry’s critical success factors?

•Have you completed a Porter’s 5 Forces analysis?

•Is the “whole” or “complete” product package finalized?

•Has the company begun generating revenues?

•Are all key managers and board members “lined up” or in place?

•Has your business plan been distributed for funding?

•Have you validated assumptions and have a dynamic financial model?

•Have you recruited and partnered with a beta customer?

•Have you identified and validated operational milestones?

•Is your in-depth primary market research complete?

If you can answer “yes” to the two “opportunity identification” questions, but not to the all of the questions in these two columns, apply for the Assessment Grant.

If “no” to either of these two questions,

you are too early for Dare to Dream. Consider applying

next term.

If “yes” to all the questions on this page, you are most likely beyond Dare to Dream, contact the Zell Lurie Institute BEFORE applying.

•Have you developed a full investor pitch?

If you can answer “yes” to the questions in the first three columns but not all in

“integration” and “business launch”, apply for the Integration Grant.

Dare to Dream Applications

• Student-led teams convince ZLI of– Innovation– Value– Motivation

• Application and review criteria– Different requirements and evaluation for

Assessment and Integration

ApplicationsLinked to the Zell Lurie Institute web site

www.zli.bus.umich.edu

• Three sections:– Team information

– Business concept information

– Application and award agreement• KNOW WHAT YOU ARE APPLYING FOR!!!

Assessment Application• What is innovative about the product or

service you are proposing? Is this a new or better product, service, technology, business model, or process?

• Describe the benefits of your product or service for your target market segment.

• What is the target market for this product or service?

• What are the initial indications of market potential in terms of customers, units or revenues?

Assessment Application• What is the nature of the competition in

your market? If you are entering a new market, how are customers’ needs being met now?

• Describe the entrepreneurial aspirations of the management team.

• Describe the information needed and steps to launch your business.

Integration Application• What is innovative about the product or

service you are proposing? What features make this superior?

• Describe the benefits of your product or service for your target market segment. What will your solution displace?

• What is the market potential for this product or service in the initial target market segment? What other attractiveness is there for that segment?

• What is the nature of the competition in your chosen market? What is the anticipated response from current competitors and potential new entrants?

Integration Application• What are the industry conditions that allow

this company to be competitive in the market?

• Describe the entrepreneurial aspirations of the management team.

• Identify the critical success factors for this business. How are they addressed by the team?

• Provide a one-page financial summary for 2 years.

Critical Success Factors• CSFs are particular to the business model in a

specific industry.• In any concern, there are dozens of variables

that will determine the success or failure of a business.

• CSFs are those 2 – 5 variables which “trump” all the others.

– Example: general retailing• CSF: “location, location, location”

– McDonald’s, Starbucks

– Example: mass market retailing• CSF: logistics and inventory management

– Target, Wal-mart

– Example: high-end retailing• CSF: customer relationships

– Neiman-Marcus, Mercedes

Critical Success Factors• Which decisions or activities, done right,

will (almost) always deliver disproportionately positive effects on performance?

• Corollary – Fatal flaw– What few decisions or activities, if wrong, will

(almost) always have severely negative effects on company performance?

• How will you build your team and/or business model to take full advantage of CSFs?

Example of 2-year financialsQ1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006

Unit Price 5.99 5.99 5.99 5.99 5.99 5.99 5.99 5.99

Units Sold 150 188 516 593 682 784 902 1037

Sales (Dollars) 898.50 1123.13 3088.59 3551.88 4084.67 4697.37 5401.97 6212.27

Cost of Goods SoldInitial Cost ($.30/Unit) (45.00) (56.25) (154.69) (177.89) (204.57) (235.26) (270.55) (311.13)

Gross Margin 853.50 1,066.88 2,933.91 3,373.99 3,880.09 4,462.10 5,131.42 5,901.13

G & A ExpensesPrinting and Mailing (150.00) (150.00) (150.00) (150.00) (150.00) (150.00) (150.00) (150.00)

Office Supplies (25.00) (25.00) (25.00) (25.00) (25.00) (25.00) (25.00) (25.00)

Website Development (200.00) (2,200.00) (1,500.00) (300.00) (300.00) (300.00) (300.00) (300.00)

Monthly Website Fee (119.85) (119.85) (119.85) (119.85) (119.85) (119.85) (119.85) (119.85)

Officer's Wages (300.00) (300.00) (300.00) (500.00) (500.00) (500.00) (500.00) (500.00)

Worksheet Editing Service (200.00) (300.00) (400.00) (400.00) (400.00) (400.00) (400.00) (400.00)

Accounting and Legal Fees         (500.00) (300.00) (300.00) (300.00)

Selling ExpensesTravel (Promotion) (300.00) (600.00) (500.00) (500.00) (500.00) (500.00) (500.00) (500.00)

Advertising and Promotion (75.00) (1,000.00) (700.00) (700.00) (500.00) (500.00) (500.00) (500.00)

Paypal Fees (26.36) (32.87) (89.87) (103.30) (118.76) (136.52) (156.96) (180.46)

Net income before tax $ (542.71) $(3,660.85) $ (850.81) $ 575.84 $ 766.49 $ 1,530.73 $ 2,179.61 $ 2,925.83

Evaluation of ApplicationsMost attractive for

AssessmentMost attractive for Integration

Description of product or

serviceClearly articulated and understood.

InnovationSolution uses new or better technology, process, or business model to deliver product

or service that adds value to customer.

Market needs, benefits, value

Value for the customer is clear and likely to be captured by the firm.

Clear value that is likely to be captured by the firm and the firm has an understanding of the

degree of displacement of current market solution.

Market sizeSome preliminary and believable

indication that market is large “enough.”

Market data supports large or large, growing market. Relationship between target and

broader market is clear.

Industry Attractiveness

Market dynamics and forces are supportive of new players OR dynamics can be easily

considered and addressed by firm.

Competition

Competitive environment is favorable to firm and team has identified modes to address.

Response expected to be weak and/or competently addressed.

Competition and Industry

Shows understanding of competitive and industry landscape.

Entrepreneurial Aspirations Clearly articulated; convinced of ambitions; will likely continue to engage ZLI.

Next StepsShows understanding of business

development process.

Critical Success Factors (CSFs)

The “right” CSFs have been identified and it is clear the team has the understanding to

capture.

Financial Planning

Based on realistic assumptions, the financials are justifiable and actionable.

Moving Beyond Dare to Dream

Encouragement for students to– Take risks such as

• Executing primary research with customers and technologists

• Undertaking incorporation process• Recruiting and building a team

– Explore opportunities• Is your solution the right solution for market

need?• Is there a better application or market for your

solution

– Expend effort and dedicate time• Fit these activities into your already busy

Michigan schedule

Moving Beyond Dare to Dream

Tie in to other entrepreneurial activities– ES electives

• ES615: New Venture Creation• ES###: Innovation (new for Winter ’06)

– Michigan Business Challenge• Iterative, multi-cycle tournament for student-

led start-ups. Over $30,000 in prize money

– Marcel Gani JumpStart! internships• Opportunities for student CEOs to intern at

their OWN start-ups

Process and Timeline9/16 Information session

10/14 Fall ’05 awardees announced

Fall ’05 applications due9/30

4/14 Fall ’05 deliverables due

1/27

Next application deadline: Complete Fall ’05 Assessment deliverables become part of application for Winter ’06 Integration

2/17 Winter ’06 awardees announced

9/7 Winter ‘06 deliverables due

Questions?

Dare to Dream Grants

Paul Kirschpskirsch@umich.edu

Dare to Dream Grants and Business Stage Activities

IdeateBusiness

AssessBusiness

OpportunityIdentification

IntegrationBusinessLaunch

•Can you articulate the innovation in your idea?

•Do you have a solution that delivers benefits and solves market pain?

•Are you in the process of deciding what your business model will be? •Have you identified the initial market?

•Have you articulated the value proposition?

•Do you understand how this company fits within the industry?

•Do you have a preferred market entry strategy?

•Have you conducted your target market research?

•Are initial financial and cost estimates complete?

•Do you know the industry’s critical success factors?

•Have you completed a Porter’s 5 Forces analysis?

•Is the “whole” or “complete” product package finalized?

•Has the company begun generating revenues?

•Are all key managers and board members “lined up” or in place?

•Has your business plan been distributed for funding?

•Have you validated assumptions and have a dynamic financial model?

•Have you recruited and partnered with a beta customer?

•Have you identified and validated operational milestones?

•Is your in-depth primary market research complete?

If you can answer “yes” to the two “opportunity identification” questions, but not to the all of the questions in these two columns, apply for the Assessment Grant.

If “no” to either of these two questions,

you are too early for Dare to Dream. Consider applying

next term.

If “yes” to all the questions on this page, you are most likely beyond Dare to Dream, contact the Zell Lurie Institute BEFORE applying.

•Have you developed a full investor pitch?

If you can answer “yes” to the questions in the first three columns but not all in

“integration” and “business launch”, apply for the Integration Grant.