FINANCING AND CAPITALIZING
BUSINESSES
Presented By Dawn McGee,
CEO Goodworks Ventures, LLC
SELF-FINANCING
Using your own money and cash flow to build and grow a business.
Pros:
Cons:
Keep all of your business, don’t have to
answer to investors.
Some products are too expensive for most
people to finance on their own (e.g.
pharmaceuticals).
Don’t have to be in an extreme growth
business.
Personally very risky.
Self-Financing Business Development Methodologies:
Lean Startup
“Bootstrapping”
LEAN STARTUP
Steps to creating a lean startup
1. Have an idea
2. Build a minimum viable product
3. Measure how customers are behaving right now
4. Conduct experiments to see if you can improve metrics from
baseline to ideal
5. When experiments reach diminishing returns pivot
Minimize the time through the loop.
Source: http://lean.st
“BOOTSTRAPPING”
Eight Strategies for Successful Bootstrapping:
1.
Find the right product or service: Try to sell the product before it’s built. If no
one wants it adjust.
2.
Immerse yourself: What does the market look like and where are the
opportunities?
3.
Become the expert yourself: Know your market inside and out.
4.
Think in black and white: Don’t get bogged down by distractions, focus
exclusively on core issues of making and selling.
5.
Get ready for rough times ahead: Be frugal.
6.
Don’t buy an existing business: Old cultures can be difficult to supplant with
new.
7.
Consider carefully before joining with a partner: Partners add complexity to
decision making, make sure they’re bringing more value than problems.
8.
Just jump in! The real learning occurs when the business begins.
SELF-FINANCING RESOURCES
The Lean Startup by Eric Ries
Bootstrapping Your Business by Greg Gianforte and Marcus Gibson
The Four Steps to the Epiphany and The Startup Owner’s Manual by Steve Blank
Lean Customer Development Videos by Steve Blank parts 1, 2, 3, 4
Business Model Canvas
Startup Weekend Resource List
Startup Weekend Graphical Guide for Starting a Business in 54 Hours
OUTSIDE CAPITAL
Using other people’s money to build and grow a business.
Pros:
Cons:
Ability to create products with long or
expensive development cycles.
Potential to lose control of your business.
Less personal risk.
Can be very time consuming, expensive,
and difficult to secure outside capital.
Sources of outside capital:
Family and friends, banks, angel investors and venture capital investors.
FAMILY, FRIENDS AND BANKS
Family and friends are often the first source of outside capital.
Banks have income and collateral requirements which make them less than ideal
sources of capital for new businesses.
Alternative debt financing from Community Development Financial Institutions or
microlenders is more easily accessible by nascent entrepreneurs but is usually more
expensive.
ANGEL AND VENTURE CAPITAL
Angel Investors: Wealthy individuals that invest in early and mid-stage businesses.
Investment amounts tend to range from US$25,000-US$1 million.
Venture Capital: Stage of investment after angel. Typically run by dedicated venture
capital funds that collect money from multiple sources (limited partners) and invest in
high risk high reward ventures on their behalf. Venture capital investments tend to fall
between US$1 million-US$100 million.
ANGEL AND VENTURE CAPITAL IN THE MEKONG
REGION
Investors are very interested in the opportunities that have arisen from a liberalization of
economic policies in Myanmar, Cambodia, Laos, Thailand and Vietnam. There are, however, still
some institutional challenges that are impeding progress.
Challenges of investment in the Mekong:
Uneducated workforce
Markets are illiquid. Very few companies are listed on local stock exchanges.
Lax enforcement of property rights and contracts.
Legal frameworks for investment banking are unclear and in some cases don’t exist.
Poor infrastructure
Corruption
VENTURE CAPITAL BY REGION
Despite the challenges many firms have still chosen to invest because they believe in the region’s great potential.
Venture Capital firms serving Mekong countries:
Myanmar
Cambodia
Laos
Thailand
Vietnam
Mandalay Capital
Devenco
VinaCapital
Ardent Capital
VinaCapital
White Lion Ventures
Uberis Capital
Angel Investment
International
VNET Venture Capital
Finansa Vietnam Ltd.
Leopard Capital
Leopard Capital
Leopard Capital
M8VC Co
IDG Ventures Vietnam
Cube Capital
SCVD
Mekong Capital Ltd.
Bagan Capital
Cambodia Capital
Insitor
Navis Capital
ARUN, LLC
Synergy Social
Ventures
MEKONG AREA VENTURE INVESTMENT
MOORE CORP.
Kingdom Breweries Ltd
Asia Chemical Corporation
Established in 2007, Moore is
an online content and
advertising company with a
first-mover online ad network
(VietAd), a pioneering music
streaming portal
(Nghenhac.info), the leading
photo storage and sharing site
(Anhso.net), and flexible
content management system
solutions for online publishers.
Kingdom Breweries brews and
distributes premium beer for
the local Cambodian market
and export markets in
Thailand, UK and France.
ACC is a leading distributor of
high-quality specialty
ingredients, chemicals, non-oil
related commodities and other
materials, sourcing from
worldwide suppliers and selling
to a wide range of leading
enterprises in Vietnam. The
company specializes in
supplying to the food and
beverage industry.
Investor: IDG Vietnam
Investor: Leopard Capital
Investor: Mekong Capital