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Navigating the Entrepreneurship Ecosystem (Vlog) (view source)
Revision as of 15:28, 13 June 2016
, 15:28, 13 June 2016no edit summary
At this initial stage, it may be helpful for you to seek partnership with an entrepreneurship institution, the three most common being accelerators, incubators, and hubs. These three types of institutions, as defined following by [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2518668 research] from MIT, the National Bureau of Economic Research, and Rice University, are critical components of the entrepreneurship ecosystem and a viable next step for any early entrepreneur. Accelerators are "fixed-term, cohort-based programs including mentorship and educational components, that culminate in a public pitch event, often referred to as ‘demo-day’.” The mission of an accelerator, often a non-profit entity, is to provide early stage start-ups with resources, mentorship, and networking needed to gain access to venture capital funding. On average, cohorts stay with an accelerator for 3 months culminating with a pitch to several venture capital investors.
Incubators “shelter vulnerable nascent businesses, allowing them to be stronger to become independent," and they serve as a temporary space for start-ups to develop in their early stages. Unlike accelerators, there is no formal curriculum, cohorts, or duration of stay. Residents of incubators pay fees for both rent and services, and are not offered the breadth of resources found in an accelerator. Hubs, also known as tech hubs or startup hubs, are entities that serve as an intersection between incubators, accelerators, and co-working spaces to foster an entrepreneurial ecosystem and environment. Hubs serve as leaders in their local entrepreneurial communities, enabling entrepreneurs through a wide variety of programming, events, and benefits. An additional benefit of both incubators and hubs is allowing the dissemination of information across multiple start-ups, allowing everyone to make smarter decisions through collaboration.
If your business has survived this far, and grown thanks to either an accelerator, incubator, or hub, chances are your company needs to expand beyond the limits of "boot-strapping" and self-funding. There are a couple of capital dispensing players in the entrepreneurship ecosystem that you could turn to. First to consider are angel investors, as defined by [http://www.mit.edu/~aschoar/KLS-Angels-June2011.pdf research ] from the National Bureau for Economic Research as “high-net-worth-individuals that make private investments in start-up companies with their own money.” Recently, there seems to be a trend of angel investors pulling their resources together in what are known as either angel groups or angel funds. In these groups, combined capital allows a combination of larger investments or a more diversified portfolio of investments. Crowdfunding or Small Business Association loans may also provide needed income at this stage.
If you still need more funding then venture capital may be for you. Venture capital firms, as defined by [http://www.ppge.ufrgs.br/giacomo/arquivos/esp207/amit-brander-zott-1998.pdf research] from the University of British Columbia, Vancouver provide "equity, debt, or hybrid forms of financing, often in conjunction with managerial expertise to privately held entrepreneurial firms" A significant benefit of utilizing venture capital is access to large amounts of capital, although in exchange for a small portion of the ownership. Many start-ups need multiple waves of VC funding before developing enough to go publicthrough an IPO, or to be bought out by a larger companythrough an acquisition offer. The goal These two end-games are the pinnacle of a VC investment is to provide capital for a start-up to gain success in entrepreneurial achievement. In order to make a financial returnreach this point, consequently VC firms place heavy scrutiny and analysis on potential investments. These are just a few of you'll have to navigate the many helpers, hurdles, and hindrances mentioned before which lie along the your route to business growth. In order to achieve the most for your small business you may need to interact with one, two, or all of the above institutions and sources of capital. Navigating these well is a key to success.
==References==
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