1. 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

2. 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

3. 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

4. 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

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

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

7. Crowdfunding
The power of the crowd
Rewards
Equity
Credit
Donation

8. Crowdfunding Platforms GoFundMe Kickstarter Indiegogo Teespring
Youcaring
Rockethub

9. 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

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

11. 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.’

12. 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

13. 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

14. 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