1. Chapter 9 Building a New Venture Team
Entrepreneurship: Successfully Launching New Ventures, 2/e
Bruce R. Barringer
R. Duane Ireland
Chapter 9
Building a New Venture Team

2. Case Study – BrainyBunch
Founded in a pioneer in International Islamic Montessori - focus: Montessori and English.
Started in Kajang - HQ in Shah Alam

3. In 2013, 58 Brainy Bunch campuses across Malaysia and started operations in India and Singapore.

6. Talent for drawing attention and networking:
Business leaders
Media
Government agencies
College - Early childhood graduates
Chemistry – shared vision, mission and values

7. 1. New Venture Team
Group of founders, key employees, and advisers - move a new venture - an idea to a fully functioning company.
Doesn’t come together all at once.
Built as new venture progresses
Key employees – hired once – critically needed - afford

8. Involves more than founders and paid employees. E. g
Involves more than founders and paid employees. E.g. boards of directors, boards of advisers, consultants and professionals – for direction and advice.

9. New ventures - a high propensity to fail.
Liability Newness
New ventures - a high propensity to fail.
Business model – is not tested

10. Why? Can’t adjust quickly enough to new roles - not an expert
Researchers’ findings - the fact that companies - hiccups…3 reasons:
Can’t adjust quickly enough to new roles - not an expert
Lacks a “track record” with outsiders
‘Overlooked things’

11. How to Overcome?
Assembling a talented and experienced new venture team - one path to overcome these limitations.
Team of experts – proven track records
Based on merit NOT relationship

12. 2. Separate Elements of a New Venture Team

13. a. Founder or Founders
Characteristics of the founder or founders - early stage - a significant impact – new venture takes shape.
Why – vision / address?

14. Two important issues: Size and quality
i. Size
Studies have shown that 50% to 70% of new ventures are started by > 1 individual.
Started by a team rather than a single individual have an advantage.

15. Heterogeneous
Homogenous
Diverse in experience and skill
Similar in experience and skill
More creative
Less creative
Conflict is very likely
Conflict is less likely
Has more potential
Has less potential
E.g. Marketing and Electrical Engineer
E.g. Accountant and Administrator

16. ii. Quality
Several factors are thought to be significant to a founder’s success.
Higher education.
Prior entrepreneurial experience.
Relevant industry experience.
The ability to “network” effectively.
***Principle Ethical Values

17. Preferred Attributes of
Founder or Founders

19. b. Recruiting and Selecting Key Employees
Start-ups vary - how critically to add personnel.
Founders work alone or employees are hired immediately.
Founders draw upon - network of contacts to identify candidates for key positions or go through placement offices at college or university or rely on executive search companies.

20. c. Board of Directors
If a new venture - a corporation (private limited – Sdn Bhd) - legally required to have a board of directors.
A panel of individuals - elected by a company’s shareholders to oversee the management of the company.

21. Roles of BoD
A board - made up of both inside directors and outside directors.
An inside director – company director / key officer of the company.
E.g. CEO / GM
An outside director – someone not employed
E.g. Non-Executive Director / Board Member

22. THREE Formal Responsibilities
Appoint key officers.
Declare dividends / bonus.
Oversee the company affairs.

23. Frequency of Meetings and Compensation
Most meet three to four times a year.
New ventures - more likely to pay their boards
Company stock
Ask them to serve on a voluntary basis
Pay a cash honorarium.

24. TWO MAIN Ways a BoD Can Help a New Venture Get Off to a Good Start
Function
Importance of Function
Most useful role is to provide guidance and support to company’s managers.
Many founders and CEOs interact with board members frequently and obtain important input and advice.
Provide Guidance
To lend legitimacy to a company.
Well-known and respected board members bring instant credibility to a company.
Lend Legitimacy

25. Attributes of Effective BoD (Group)
Regular and clear communication with the CEO
Customer-focused point of view
Complementary mix of talents
Strong ethics
Collective decision

26. Attributes of Effective BoM (Individual)
Strong personal and professional networks
Respected in their field
Strong interpersonal communication skills
Ability and willingness to mentor the CEO and top managers
Prior experience in the industry

27. d. Rounding Out the Team: Role of Professional Advisors
Board of Advisers
Lenders / Investors
Other Professionals

28. i. Board of Advisers (BoA)
A panel of experts - asked by a company’s managers to provide counsel and advice on an ongoing basis.
Unlike a board of directors, an advisory board possesses no legal responsibility for company - gives nonbinding advice.

29. Can be set up for general purposes - address a specific issue or need.
Syariah, talent management, reward system, leadership, etc

30. Many people are willing to serve on a company’s BoA than BoD
Requires less time.
No potential legal liability involved.

31. Like the members of a BoD, members of a company’s BoA provide guidance and lend credibility to the company.

32. Board of Advisers Name Profession Role on Advisory Board
Tan Sri Dr. Rais Yatim
Chairman of IIUM Holdings
Adds credibility and provides the company advice on strategies and networking
Prof. Dato’ Dr. Tahir Azhar
Chairman of IIUM Higher Education
Adds credibility and provides the company advice on thinking-out-of-box and practical solutions

33. Guidelines to appoint a Board of Advisers
Disillusioned if they don’t play a meaningful role - company’s development and growth.
Should look for board members - compatible and complement one another – vision, working values, experience, and expertise.

34. Important Note:
When inviting people to serve on BoA - should carefully spell out rules in terms of access to confidential information.

35. Signaling
When a high-quality individual does agree to serve on a board of a company - in essence, ‘signaling’ - potential to be successful.
Without a credible signal - difficult for potential customers, investors, or employees
to identify high quality start-ups.

36. ii. Lenders and Investors
Have a ‘vested interest’ in companies they finance - causing them to be very involved.
Help new companies by providing guidance and lending advice.
They assume the natural role of providing financial oversight.

37. Beyond Financing and Funding: Ways Lenders and Investors Add Value
Provide insight into the industry and markets
Help identify and recruit key management personnel
Help the venture fine-tune its business model
Serve as a sounding board for practical ideas
Provide introductions to additional sources of capital
Serve on the new venture’s board of directors or board of advisors

38. iii. Other Professionals
Make up a company’s new venture team - vary by company.
Solicitor, accountant, business consultant and business coach.

39. Business Consultants
An individual who gives professional or expert advice.
Two categories: paid consultants and consultants - available for free or at a reduced rate through a nonprofit of governmental agency.
E.g. Consultant – grant application, setting up a new branch abroad

40. A business coach is just like a sporting coach
A business coach is just like a sporting coach. A sporting coach pushes an athlete to achieve optimum performance, provides support when they are exhausted and teaches the athlete to execute plays that their competition does not anticipate.

41. Revision