Business Administration 362 1999-3 Lecture 1 Notes Discussion: Startups Getting your first million or so… Angel Investors versus Acquisitions IPO Crowdsourcing ICO Drew Parker September 1999

Business Administration 362 1999-3 Lecture 1 Notes Where to Begin The world’s greatest idea unfolds First, prototype the idea Develop Patent? Beg, borrow… Drew Parker September 1999

Business Administration 362 1999-3 Lecture 1 Notes Next Once market has been defined Angel Investors? Looking for convertible debt or equity Next, or an alternative Venture Capital A bit more proven Still early Often the precursor to the IPO Drew Parker September 1999

Business Administration 362 1999-3 Lecture 1 Notes Early Steps Buyout / Takeover Look to attract the ‘big guns’ Have some sudden early success Look to a tech parent Google Microsoft Yahoo EBay Drew Parker September 1999

Business Administration 362 1999-3 Lecture 1 Notes Or Go Public The coveted IPO Institutional investors Investment bankers underwriting Drew Parker September 1999

Business Administration 362 1999-3 Lecture 1 Notes Newer Alternatives Crowdfunding Initial Coin Offerings Drew Parker September 1999

Crowdfunding The power of the crowd Rewards Equity Credit Donation

Crowdfunding Platforms GoFundMe Kickstarter Indiegogo Teespring Youcaring Rockethub

Crowdfunding Early Startup Funding Campaigns DoubleFine Adventure Kickstarter, sought $300k, got $1m+ Pebble Watch Kickstarter, sought $100k, got $10m+ Hendo Hoverboards Kickstarter, sought $250k, got $500k+ Solar Roadways Kickstarter, sought $1m, got $2.2m Potato Salad Kickstarter, sought $10, got $55k

Discussion Questions What makes a campaign successful? Will it endure as a funding source? Is it evolving and maturing?

A Final Exam Question… A ‘traditional’ approach to launching a business or technology idea has been under intense competition of late. Venture capital, or ‘angel investors’ have been crucial to getting funding for a new venture, but once again so-called ‘disintermediation’ has come into play. Discuss the notion of crowdfunding to fund a startup for a new technology product. What options exist here, and what would you recommend to a person or organization looking for funding on what they believe to be the ‘next killer idea.’

Initial Coin Offerings Create and sell a cryptocurrency Tokens are created and sold to hold some unit of ‘value’ Useful for startups and avoids regulatory issues and intermediaries Large failure rate Frequent source of scams, like pump and dump schemes Builds on the history of early cryptocurrencies, like Bitcoin https://coinmarketcap.com/

2 Successful ICOs NEO ETHERIUM Backed by China’s government and Microsoft ‘Smart Contracts’ Token price started at 3 cents, peaked at $180US ETHERIUM Cryptocurrency and smart contracts through blockchain Start 31 cents, peak $700US, now ~$350 https://www.investopedia.com/tech/most-successful-icos-all-time/

Initial Coin Offerings Examples: The DAO (Decentralized Autonomous Organization) Autonomous Venture Capital Venture Investors buy coins, then vote on proposals DigixDAO DGX – coin backed by 1 gram of gold DGD – coin offering percentage of transaction fees of DGX Augur Decentralized betting platform based on future events Crowdsourced predictions