Technology Ventures From Idea To Enterprise 3rh Edition Thomas Byers, Richard C Dorf - Solutions

19.6 What deal terms can a venture capitalist suggest to ensure entrepreneur incentives are aligned in both good and bad times for the firm? What are deals terms an entrepreneur would suggest to ensure investor incentive alignment in both good and bad times for the firm?
19.5 What are the key factors a venture capitalist uses to value a new venture? Describe what value parameters are most likely different between an investor and an entrepreneur.
19.4 What is a term sheet? Specify three items in the term sheet that you would want as an entrepreneur. Specify item clauses in the term sheet that you would want as a venture capitalist. Why is it important for both parties to be happy with the resulting deal?
19.3 As the CEO of a new technology venture, you and your team have set a valuation for your firm of $10 million (pre-money) and found a willing venture capital firm. The venture capital firm, however, has set a valuation of $6 million. Revenues next year are projected to be about $6 million, and
19.2 Business plan contests offer an opportunity for entrepreneurs to present their business plans. The Clean Tech Open in the United States offers one such contest(www.cleantechopen.com). Visit the site, study the description of the winners, and prepare a brief report on an enterprise that most
19.1 Twitter allows customers to send (tweet) and read short messages to and from friends, colleagues, and others to answer the simple question “What are you doing?”. Write an elevator pitch for this venture.
4. What percentage of your venture do you plan to offer to outside investors?
3. How much capital is needed initially and for what purpose?
2. Why did you select these sources?
1. What sources of capital will you use for your venture?
18.9 In what circumstances should grants be viewed as an attractive source of capital? When would a grant be less appropriate?
18.8 Explain the purpose and value of staged financing (a) for investors and (b) for the entrepreneur(s).
18.7 Consider the Netflix IPO prospectus in Figure 18.5. Calculate the percentage of Netflix that is being sold to the public. Assume all issuable stock options (including unvested shares) and warrants were exercised before the IPO. What percentage of the company would then be sold?
18.6 Rackspace is a Web hosting company that went public in 2008(www.rackspace.com). The firm had sales of $362 million in 2007. The firm went public via an OpenIPO auction process using bids for shares(www.wrhambrecht.com/ind/auctions/openipo/index.html).Examine the OpenIPO auction process and the
18.5 Consider a new firm in the nanotechnology field that seeks a second round of financing. This year, it has revenues of $2 million and projects profitability of $200,000 next year on revenues of $3 million. It is raising $1 million from a new set of investors. What share of the company should it
18.4 The CEO of an early-stage software company is seeking $5 million from venture capitalists. The reasonable projected net income of $5 million in year 5 can be valued at a PE of 20.Furthermore, the sales in year 5 are projected at $25 million.What share of the company would the venture
18.3 DGI, a new firm in formation, has developed a set of projections shown in Table 18.21. The expected and pessimistic cases are shown. The harvest of the firm is planned for the fifth year. The firm is seeking an initial investment of $1 million before launching in year 1 as well as a commitment
18.2 Glenn Owens’s attractive technology start-up requires $10 million to launch. Projections show earnings of $10 million and sales of$80 million in the fifth year. The venture capital firm expects a return of 50 percent per year for the five-year period prior to an IPO. What valuation would you
18.1 Viscotech Inc. is described in exercise 17.3. Determine the percentage ownership an angel group may demand for investing the $1 million sought by Viscotech at the start of year 1. If Viscotech is unable to obtain the bank loan of $500,000, it will need an equity investment of $1.5 million.
3. How much cumulative cash is necessary to reach that point?
2. How long will it take to break even and become cash-flow positive?
1. Describe the assumptions for your venture that will be used to create the financial projections. Sketch out an income statement.
17.10 A new clean technology company has fixed costs of $420,000 and variable costs per unit of $3,100. Competitor analysis shows that the price for a comparable product ranges from$6,500 to $9,300. The goal of the firm is to attain profitability this year while increasing its market share next
17.9 Superconductor Inc. is planning to start on January 1, 2010, with an initial investment of $200,000 from its founder team. It projects sales of $12,000 in February 2010 and a growth rate of sales of 10 percent per month for the foreseeable future (at least two years). It expects to receive
17.8 Reconsider the firm described in exercise 17.6 when it is determined that fixed costs have declined to $30,000 and the firm has determined by studies that it can only expect to sell 60 units this year. What price should it select to ensure selling the 60 units profitably?
17.7 Continuing exercise 17.6, Sensor International sells 300,000 packages in its first year and 400,000 in its second. If the investor’s original investment was $100,000, determine the return on investment in year 1 and year 2 for the firm. Assume a tax rate of 20 percent.
17.6 A new firm, Sensor International, is preparing a plan based on its new device to be used in a security network. The cost of manufacturing, marketing, and distributing a package of six sensors is 14 cents, and the price to the distributor is 68 cents.The firm calculates its onetime fixed costs
17.5 A software firm has fixed costs of $800,000 and variable costs of$12 per unit. Calculate the breakeven quantity (Q) when each unit sells for $50. If the firm sells 50,000 units in a year, what is its profit for that year? Assume the tax rate for the firm is 20 percent.
17.11. The firm plans to start with an equity investment of$1,000,000 and a five-year loan of $500,000. Determine the cash on hand at the end of each year. Also, determine the return on equity and the return on investment for each year.17.4 A new venture is launched with an initial investment (cash
17.3 Viscotech, Inc. is planning to enter the field of electro-optical systems for automated optical inspection and detection of defects in manufacturing components and modules. The projected financial revenues and income are shown in Table
17.2 Examples of revenue models are listed in Table 16.1. Select three of these revenue models and explain the challenges in creating sales projections for each.
17.1 Define the interrelationships between an income statement, balance sheet, and cash flow statement. Which one is most important for a new venture and why?
3. Using Table 16.7, discuss your harvest plan.
2. Describe the profit model of your venture.
1. Describe the revenue model of your venture.
16.7 Compare the most recent yearly income statement for Microsoft, Apple, Dell, Sony, and Qualcomm. Examine the gross margins for each of these companies (cost of goods sold divided by revenue). Complete a similar ratio analysis against Sales, General & Administrative (SG&A) and Research
16.6 Research and determine the most profitable industry sector in a country of interest (profitability on either a relative or absolute basis). What is driving this high profitability? Is it sustainable, and for how long?
16.4 Skype offers Voice over Internet Protocol (VoIP) telephony services and PC to PC calling. The telephone service began as a free service. Describe the revenue and profit model for Skype specifically. Has its acquisition by eBay changed Skype’s revenue model?16.5 Salesforce.com sells software
16.3 Zipcar gives its members short-term, on-demand use of a fleet of cars (www.zipcar.com). Before launching this service, Zipcar proposed a pricing scheme of a $300 refundable security deposit, a $300 annual subscription fee, and $1.50 per hour plus 40 cents per mile. Create another pricing
16.1 outlines the division between profit and cost. Extend Figure 16.1 to account for the profits and costs of partners and suppliers in a company’s value chain.16.2 Google, the search engine firm, uses a complex revenue model and a related profit engine. It has a large base of users and
16.1 A company’s value chain was discussed in Section 14.1. Figure
2. For your venture, discuss the plans for going global and describe your approach using Figure 15.1 and Table 15.6.
1. Describe your venture’s approach to acquisitions and mergers as a growth strategy.
15.8 When Google initially expanded search services into China, there was surprise over Google’s decision to censor some content per requests by the Chinese government. Why did some view this as “evil”? How did Google view the concern? What are other challenges facing companies expanding into
15.7 Neopets (www.neopets.com) offers its virtual world of virtual pets globally. The firm offers its service in two languages, English and Chinese. Study the Neopets site and determine if it should be offered in many languages. What are the advantages of establishing a Neopets site for each
15.6 Social networking is one of the most prevalent Internet user activities today in many countries. However, given the geographic virality and social aspect of social networks, it has been very challenging for any specific network to dominate internationally. Le Monde created a compelling graphic
15.5 Interview a technology executive based in a country different from the company’s headquarters. How are various company functions handled (e.g., marketing, sales, operations, development)? What are the key challenges of operating away from company headquarters?
15.4 Identify a technology-based company that used acquisition to enter into an international market. Describe the strategic alignment and the executed deal terms. Was it a success? What were the key challenges that arose?
15.3 Describe how the acquisition strategies of these firms have differed: Apple, Google, Microsoft, Oracle, and Qualcomm.
15.2 A software firm is available for purchase, but it has experienced no growth for several years. The firm provides a cash return annually before taxes and owner’s salary of $100,000. It has annual sales of $1 million. As a purchaser of this firm, you select a discount rate of 14 percent.
15.1 An acquirer looks for a company with a good profit margin, a proven history, and a fair price. Choose an industry of interest and list five criteria for selecting candidates for acquisition.
3. Draft a value web for your venture as in Figures 14.5–14.7.
2. Draw a road map with milestones for your venture as illustrated in Figure 14.11.
1. Describe the key business processes used by your venture.
14.9 Describe and contrast the operational challenges faced by the following start-ups: (a) new drug discovery company, (b)medical device company, and (c) biofuel company.
14.8 Describe and contrast the operational challenges faced by the following start-ups: (a) consumer Web services start-up, (b)iPhone application company, and (c) electronic device company.
14.7 About 5 to 10 percent of pharmaceuticals produced do not meet specifications and have to be reworked or discarded. Quality testing is done by hand, and the batch process method is widely used. A new venture has been launched to design new processes for drug makers. What new methods and
14.6 The use of a new technology can bring new life to a mature industry such as the plastics industry. Logistics, supply-chain, and scheduling software enable large productivity increases in several mature manufacturing industries. Examples of such software firms are i2, Moldflow, Quad, and Keane.
14.5 Wal-Mart has invested heavily in RFID technology to improve the efficiencies of its warehouse operations and inventory control.Outline Wal-Mart’s value web. How has Wal-Mart’s adoption of RFID influenced its supply partners? What new opportunities have been created with RFID? What have
14.4 Prepare a road map diagram for the development and launch of a new model of a hybrid or all-electric automobile to compete with traditional automobiles. What processes are the same?Different?
14.3 China is a world-class manufacturer and has advantages of size, scale and cost. Identify a Chinese assembler of electronic products for European companies. What advantages does China have versus manufacturing in Europe?
14.2 Flextronics manufactures products for many electronic companies(www.flextronics.com). It is a global company, headquartered in Singapore, and has over 120,000 employees. The company’s core competence is lean manufacturing. Where does Flextronix fit in the value web for Microsoft, Ericsson,
14.1 Select a start-up of your choice. Using the format of Figure 14.6, prepare a value web diagram for this company.
3. Describe what functions your venture will outsource.
2. What location have you selected? Describe your planned use of Internet technologies and commerce.
1. How do you plan to attract talent and resources?
13.7 There is a strong trend in many information technology fields of outsourcing to another country and continent. What are the primary motivations for this movement? How and why are start-ups participating in this trend? What are some of the risks for a new enterprise considering outsourcing?
13.6 Identify a firm that operates on a hybrid model of using the Internet as well as physical facilities and stores. Describe the advantages and disadvantages of the hybrid model for the firm.
13.5 Research In Motion develops and manufactures wireless handheld devices and provides the Blackberry service. The firm is located in Waterloo, Ontario, Canada. Study and describe the location advantages and disadvantages of the firm. Is it located in a cluster setting?
13.4 Identify a local start-up company (or select one from another part of the world). Does this company operate in a specific industrial cluster? What local resources or local advantages does the company leverage? Why is the company located where it is?
13.3 Four of the most popular U.S. locations for technology firms are Boston, the San Francisco Bay area, Austin, and Seattle. Using Table 13.3, determine the most attractive location for an orthopedic medical devices start-up. Do the same for a clean tech start-up.
13.2 Determine who is or was one of the most persuasive people you have known. Using Table 13.2, describe how this person exercised his or her sources of legitimacy.
13.1 In 2005, Google released Google Earth and the Google Map APIs. Google brought compelling mapping and visualization functions within reach of all Web developers. In 2006, Amazon released a grid storage Web service called S3 that stands for Simple Storage Service. Amazon positions the service as
2. Discuss your plans to build a board of directors and a board of advisors. Name some candidates for these boards.
1. Describe the team and the organizational arrangement for your venture.
12.8 Examine Google’s corporate philosophy “Ten things Google has found to be true” (www.google.com/corporate/tenthings.html).What does Google’s “do no evil” phrase mean? How are these broad truth statements translated into action within the Google organization and culture?
12.7 24/7 Customer provides services to U.S. firms that wish to outsource call centers and CRM activities to India. Using the information provided at the firm’s website, describe the founding team of this firm. Also, describe its organizational design (www.247customer.com).
12.6 Red Hat is the leading distributor of Linux software and services.The firm had over 2,500 employees and revenues of $650 million in fiscal year 2009. Using the concepts of Section 12.7, describe the firm’s organizational culture.
12.5 Getty Images, founded in 1995, offers still and moving images distributed via its website (www.gettyimages.com). Examine its 2008 annual report and determine how the firm motivates its employees. Describe its employee stock plan and its organizational design using Table 12.2.
12.4 Take-Two Interactive (www.take2games.com) develops entertainment software games. Revenues grew from $19 million in 1997 to $1.5 billion in 2008. Describe the organizational design for Take-Two, which has about 2,100 employees. Use Figure 12.1 to help determine its organizational model.
12.3 Genentech (www.gene.com) has a unique culture known for rigorous science, guarding of industry secrets, and rigid rules.Its key principle is: good scientists make for good science make for good products make for a good company. Describe Genentech’s culture in terms of norms and rituals.
12.2 Matthew Smith knows his talented people are the reason for the success of ElectroMag. Smith has noticed that the costs of medical and dental benefits are escalating, and he needs to control them. With 800 employees, the firm’s profitability is threatened. He has three options: (1) eliminate
12.1 Examine the beginnings of a technology venture that currently has lots of “buzz”. Who were the company founders? What background, capabilities, and qualities did each bring to his or her new role? Who was hired next and why?
6. Research the industry for your venture and determine the length of its sales cycle.
5. How will your venture sell its product and develop customer relationships?
4. Briefly describe the marketing mix for your product.
3. Using Table 11.3 and Figure 11.5, describe the market research and customer development plans.
2. Develop a positioning statement using the template in Figure 11.4.
1. For your venture, describe the customer and the target segment you have identified.
11.10 What is the best way to reward salespeople: salary, commission, or a mix of the two? How do the rewards motivate different selling behaviors? What is the best method for a new emerging medical technology business such as Enzo Biochem(www.enzo.com), or a clean-tech business such as
11.9 Identify a high-tech firm that uses an indirect sales channel model. What is the model used? Why was the indirect sales model chosen for its particular products or services?
11.8 HDTV is an emerging consumer electronic technology. Discuss the marketing challenges associated with HDTV (e.g., building an ecosystem of content, players, and content distribution).How do you see this influenced by (a) competing with DVD(the last technology generation) and (b) emerging
11.7 Electronic Arts (EA) Sports has gained large brand value by securing an exclusive five-year license from the NFL in the United States. Determine if EA Sports has reaped the rewards from acquiring the rights to use the valuable NFL brand.
11.6 Powerful brands are built on innovativeness and advertising.Examine the brand value for Genentech, Merck, and Apple, and describe the reasons for their brand power.
11.5 Business Week with Interbrand conducts an annual worldwide brand survey ranking the top 100 global brands. Examine the most recent survey and choose a new entrant to the list.Describe that company’s marketing objectives and customer target segments.
11.4 Facebook and MySpace are rapidly growing social networking sites based in the United States but with global reach. Prepare a positioning map for these two firms.
11.3 What is viral marketing? Provide an example of a start-up using viral marketing to promote and sell its product or service. Why does it work (or not work)?
11.2 With the explosion of mobile handsets worldwide, many marketing and advertising firms are looking at how to take advantage of the ubiquity of a communications device carried everywhere. Describe why marketers view the mobile handset as such a valuable marketing platform. What types of mobile
11.1 There continues to be a disparity between the advertising dollars spent on reaching TV viewers and Internet users versus the amount of time that is spent interacting with each media. A large degree of Google’s success is attributable to taking advantage of this large gap. Research to
4. What are the key elements of the intellectual property of your firm?

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Technology Ventures From Idea To Enterprise 3rh Edition Thomas Byers, Richard C Dorf - Solutions

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