|
Key
Stages |
Main
Focus Activity |
Elapsed Time Required |
Typical Time Schedule Cumulative |
Typical Participants |
Help
Needed |
Major
Costs |
Main
Risks |
Results:
ROI &
Output |
|
Idea |
Secure a
vision |
Months to years |
__ |
Yourself |
Understanding the
venture planning process
Entrepreneurial creativity
Reality check |
Own time |
Lacks commercial realism |
Inspiration & vision
Personal profile |
|
Kitchen Table |
Solidify a
dream |
2-6 Months |
Month 6 |
Friends & founders |
Confidentiality
Business judgment
Technology
Strategic thinking |
Time of several people |
Secrets leak out |
Crisp view of risk-reward
tradeoffs |
|
Founders' Commitment |
Get firm commitments from key
people |
1-2 Months |
Month 7 |
Founders only |
Commitment of 1 to 3 founders |
Nerves to commit |
Cold feet of founders |
Yes or no from founder
candidates |
|
Pullout from Employer |
Leave current employer: "stay
clean" |
1 Month |
Month 8 |
Founder
Lawyer |
Good legal counsel:
intellectual property, and labor law |
Nerves to start to live on own
savings |
Counteroffers or threat of legal
action by former employers |
Clean, legal separation from
former employers |
|
Business Plan Creation |
Write fresh
business plan |
2-6 Months |
Month 14 |
Founders
Consultants
Lawyer
CPA Firm
Intellectual property attorney |
Wise business judgment,
especially
marketing
and financing
Sustainable competitive advantage
advantage |
Time
Personal computer
Business support software
Copying & printing equipment |
Plan is not worthy of being
funded
Plan lacks distinctive
competence |
Inspired document
Sustainable advantage
Clever strategy |
|
Filling Management Team |
Attract vital talent |
2-9 Months |
Month 18 |
Friends
Consultants
Media
CPA Firm
Recruiters |
Candidates
Compensation plan
Wise people selection |
Lots of time for interviewing |
Compromise
No money, no hire
Leaks of secrets
Distractions from business plan |
Recruitment of top notch
managers |
|
Raising
Seed Capital |
Get $ cash commitment from lead
venture investor |
2-12 Months |
Month 27 |
Business angels
Venture capitalists
Consultants
Founders |
Understanding
the founding round and and
venture
investing process
Search for investors
Coaching on
venture presentation,
negotiation,
and
structuring the deal
Judgment on pricing and
valuation |
Time
Patience
Copies
Deliveries
Telecom
Travel |
No lead venture capitalist
Get shopworn |
Firm commitments of seed venture
capitalists |
|
Closing Capital &
Incorporation |
Get cash into bank account |
1-2 Months |
Month 28 |
Lawyer
Venture capitalists
Founders
Commercial banker |
Good
negotiating tactics
Writing an agreement
Financial counsel
Legal advice |
Legal fees |
No cash, so must start over |
$ Cash in the bank |
|
Finding a Home |
Rent working quarters |
1 Month |
Month 29 |
CEO
Real estate broker |
Real estate broker
Facilities consultant |
Time
Rental deposits |
Bad choice: size locations, $ per
month, wrong length of lease |
Place to work for a year |
|
Start-Up |
Hire people
Get started building first product |
6-18 Month |
Month 30 |
Board of directors
Investors
Employees
Suppliers
Strategic partners |
Start-up experience |
Burn rate: $ per month |
Short of good people
Product completion slips
Competition starts too soon |
Live company in action |
|
Secondary Capital Rounds |
Raise more $ cash
Leverage expensive equity |
2-6 Month each round |
In Years 2-4 after Seed Round
closes |
Venture capitalists
Corporate investors
CEO
Equipment lessors |
Venture capital leads
Equipment lessors |
Time of top management |
Lack of management focus
Run out of cash, miss payroll
Bankruptcy |
Sufficient $ cash in bank
Price per round higher than last
round |
|
Launch First Product |
Get
customers |
1-2 Years from start on work |
24-36 Months |
Customers
Whole company
PR firm |
Strong
marketing skills
Positioning of company and first
product
Cash reserves
Quality of execution of plan |
Burn rate: $ per month |
Lack of focus
Product slips
Poor market acceptance
Big competitor counter-punch |
Finish first product
Begin first sales to customers |
|
Raise Working Capital |
Leverage equity |
3 Month for each banking or
leasing round |
After first quarter of
profitability |
CEO
CFO
Commercial banker |
Profitability
Savvy banking and leasing contacts |
Time of CFO and CEO |
Have to use precious equity
instead of cheaper loans |
Funding for growth in working
capital needs |
|
Initial Public Offering (IPO) |
Gets shares liquid
Cash in some chips
Celebrate |
4 Months including road show |
Goal: IPO ready at end of Year 3 |
Investment banker
Securities lawyers
Stock exchange analysts
Industry media
General public |
Timing
Pricing of shares |
Underwriter's fees
Legal fees
CPA fees
Travel costs
Road show slides |
Bad price per share
Market window closes
Business sours |
Funding capitalists: ×5 to ×10
investment
Founders: $ millions each
Employees: × years of wages
Image as successful company |
|
Overall |
Create and grow a viable,
exciting, successful high-tech company |
4-8 Years from start to IPO |
Aim at 5 years start to finish |
Many risk takers |
Lots of effort
Several big breaks |
Founders' time, nerves, and money
$ 3-50 million of investors'
capital |
Bankruptcy
Company survives but is too small,
not able to get public |
Viable company
Great place to work
Created $ millions of wealth
Growing, high ROI business |
