Upload
lamdan
View
215
Download
0
Embed Size (px)
Citation preview
Topics on Entrepreneurship for
Game Developers
© Pedro A. Santos 2011
Summary
The Right Stuff
Ideas and Opportunities
Business Models
Founding team
Financing and Bootstrapping
© Pedro A. Santos 2011
The Right Stuff
"Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled" (Timmons, 1994)
Do you have what it takes?
© Pedro A. Santos 2011
Characteristics
Commitment and determination
Leadership
Opportunity obsession
Tolerance of risk and uncertainty
Creativity, self-confidence and ability to adapt
Motivation to excel
Entrepreneurs are social creaturesContacts with clients, employees, suppliers, financiers and partners is fundamental
© Pedro A. Santos 2011
Ideas and Opportunities
Ideas can be new inventions, technologies, gadgetsA Great and Innovative idea can wipe you outPeople won’t buy what they do not know, or never heard of
An Opportunity is an idea to solve a problem or a need of a particular market
For whom?What problem?
Is it an aspirin or a vitamin?Feasible?unique advantage?
© Pedro A. Santos 2011
Market Positioning
New ventures rarely win against established players even if entrepreneurs provide better and cheaper offering, because established companies have
DistributionAccess to capitalBrand EquityCustomer relationshipsGreat Employees
If you try to steal the giant’s lunch, the giant is likely to
eat you for lunch.
© Pedro A. Santos 2011
Business Models
FIND LOCAL BUSINESSES THAT CARE ABOUT THEIR EMPLOYEES.
Offer them a free water cooler if they allow you to refill it.Earn money by making deliveries on a regular basis.
MAKE THE FIRST REAL 3D FPS GAMEOffer the first part free over the internetSell the second part to hooked players
A business model is the way the company creates and captures
value from the Market
© Pedro A. Santos 2011
Business Models (cont)
profitable
Sustainable
Feasible with low resourcesConsole business isn’t!McDonald’s was!
adjustable
Scalable
Good to have an exit strategy
© Pedro A. Santos 2011
Founding Teams
Most high-potential ventures founded by teams
Team-based ventures have higher survival chances
Better decisions and more effective actions Ability to tap into more contact networksPsychological/emotional support
Investors expect to see strong founding teams in place (making it easier to obtain resources)
But:Dysfunctional teams is key reason for
death of early stage ventures
Entrepreneurship is a team sport
© Pedro A. Santos 2011
Assembling Effective and Cohesive Teams
Team Compositionfind complementary skills/knowledge (do not get people that know the same as you)
Ownershipproportional to contributions/commitment (unequal shares is fine if unequal commitment or contribution)Lack of fairness in rewards kills motivation
Role Allocationclear role definition (one founder for each key area, no more, no less)
© Pedro A. Santos 2011
Assembling Effective and Cohesive Teams (cont)
LeadershipImportant to have one who leads (especially in teams of 3+)
Decision-makingconsensus with qualification
after discussion, if no consensus emerges, leader makes decision based on the advice of the relevant functional manager
very strong or very weak leaders are bad for new ventures
© Pedro A. Santos 2011
Avoid the death spiral of conflict in start-up teams
Task conflict i.e.
disagreements related to the task at hand
Inter-personal conflict
i.e.
political behaviors
X
Intra-group trust
Effective decision-making Processes
© Pedro A. Santos 2011
Financing
Personal Funds and Sweat Equity
3Fs: Family, Friends and Foolsmost common source of funds. Should treat as other equity financing. Be honest about risk involved. It is easy to get but psychologically hard to manage
Business Angels, Venture CapitalVery important source of funding for new ventures
Bank Loan/Leasingit is difficult to get (requires assets and often personal guarantees are asked) but preserves your equity ownership
How to finance initial capital?(do not forget working capital requirements and cushion)
© Pedro A. Santos 2011
FinancingHow to finance initial capital?
(do not forget working capital requirements and cushion)C
ASH
FL
OW
© Pedro A. Santos 2011
Business Angels
• At startup level
• Ammounts from € 25k to €500k
• Smart Money
Associação Portuguesa dos Business Angels (APBA)http://www.apba.pt/
© Pedro A. Santos 2011
Public Venture Capital
• At startup level
• Ammounts from <€100k to >€1M
http://www.inovcapital.pt/
© Pedro A. Santos 2011
How About traditional Venture Capital?
• More common at later stages of start-up development
• Large amounts. Usually €1M to €10M
• Traditionally focused on high-technology firms in capital intensive sectors (IT, telecommunications, biotechnology, medical devices) which target large markets, have defensible IP, and are easily scalable. Nowadays a bit broader.
• Available to experienced and/or well-connected entrepreneurs
• Less frequent than what you may think from the news: only 1 in 500 newly created ventures is appropriate for VC funding
http://www.es-ventures.com/http://tt.ist.utl.pt/inovacao-e-empreendedorismo/istart-i/
© Pedro A. Santos 2011
How Venture Financing Works
Pre-money valuation: x 600k
New equity investment: y 200k
Post-money valuation: x+y 800k
% of capital owned by new investors: y/(x+y) 25%
Key for entrepreneurs is achieving high pre-money valuation!
Entrepreneurs need to demonstrate credibility and commitment, and convince potential
stakeholders of venture’s viability
© Pedro A. Santos 2011
Softare Startups in Portugal
Software startups have lower capital requirements
But are not considered “high Growth”
© Pedro A. Santos 2011
Bootstrapping
Do not borrow to cover expenses!
Do not give personal guaranties!
Strategy of lowering capital requirements to launch business by making other parties
commit to the venture
Bank Debt is bad!
© Pedro A. Santos 2011
Survival Guide to Bootstrapping
Free work from Founders
Share office/work from someone’s garage
A money-giving project is a good project
Borrow from the people who have most interest that you succeed
Your SuppliersYour Clients
Go to market as fast and cheapest as possible increase your experience and market knowledge
Leverage partner resources whenever possible
© Pedro A. Santos 2011
Above all
Don’t be afraid to fail
© Pedro A. Santos 2011
References
J.A. Timmons. New Venture Creation: Entrepreneurship for the 21st Century. Fourth edition. Irwin Press, Burr Ridge, IL, 1994.
Seth Godin. The Bootstrapper’s Bible. 2004. http://www.changethis.com/8.BootstrappersBible
Special thanks to
Filipe Santos,Professor of Entrepreneurship,
INSEAD, France