Key Stages

Main Focus Activity

Elapsed Time Required

Typical Time Schedule Cumulative

Typical Participants

Help Needed

Major Costs

Main Risks

Results:

ROI &

Output

1. Idea

• Secure a vision

Months to years

__

• Yourself

• Understanding the venture planning process

• Creativity

• Reality check

• Own time

• Lacks commercial realism

• Inspiration & vision

• Personal profile

2. 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

3. 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

4. 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

5. 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 ("unfair") competitive 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

6. 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

7. 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

8. 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 (see sample agreement)

• Financial counsel

• Legal advice

• Legal fees

• No cash, so must start over

• $ Cash in the bank

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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