Database Management Systems Ramakrishnan (Raghu Ramakrishnan)

Figure 12.12 Financial investments and stages of growth of Facebook

Zuckerberg began his project as a Harvard student, writing a program
that allowed students to select the best-looking person from photos on the
internet. According to Zuckerberg’s roommate, Arie Hasit, “he built the site
for fun”. Needless to say, Harvard’s authorities were not impressed. THE
FACEBOOK, an online photo directory, formally started in early 2004, with
co-founder Eduardo Saverin providing the initial capital – about $30,000.
Zuckerberg moved the business to California and bootstrapped his way
through its first few months, spreading the website to other universities.

It was not long into its early growth before the new venture got its first
investors. Angels Peter Thiel, Reid Hoffman and Mark Pincus invested
$500,0000 for 10.2 per cent of the company, and Sean Parker, Napster’s
founder, became Facebook’s president. Even the office painter, David Chloe,
got paid in shares, which would now be worth over $240 million. One year
later, Facebook had over 5 million users and began to experience rapid
growth, enticing Accel Partners, a VC firm headed by investor Jim Breyer, to
invest $12.7 million for a 15 per cent stake, valuing the company at $100
million. At the same time, Zuckerberg rejected an offer from Viacom to buy
the business for $75 million. Facebook continued near-exponential growth
for the next two years, and by 2008 a new round of investment, led by
Microsoft, implied a valuation of almost $15 billion, over 30x revenue.

Facebook did not focus on early revenue growth and did not become
profitable until 2009. It made a modest $382,000 in revenue in 2004; $9
million in 2005; $48 million in 2006; and in 2007 it made $153 million in
revenue with a reported $138 million loss; $272 million in 2008 with a $56
million loss; and was finally profitable in 2009 with a net income of $290
million. This is not untypical for high-potential ventures. During the
development stage, the entrepreneur is focused on product development
and market feasibility and has not yet acquired the capacity for revenue
generation. During start-up, a venture hires new employees, invests in
equipment and so on, and therefore may start to generate revenue during
this period. There is usually a significant negative cashflow during this time
that reflects investment in equipment, facilities, human capital and working
capital. In the early growth stage, revenue begins to grow, but profit and
cashflow remain negative. In many cases, revenue growth fizzles out, but for
some there is an inflection point beyond which the slope of revenue growth
increases. As in the case of Facebook, rapid growth requires significant
logistical effort to garner external financing to support corresponding growth
in working capital and fixed assets. By the time Microsoft invested $240
million in Facebook, its revenue growth was 300 per cent per annum, but it
was still generating a significant net loss and negative cashflows.
Facebook’s aim is to start generating profits and positive cashflows and
therefore make returns to debt and equity investors without the requirement
for outside financing.

CASE STUDY QUESTIONS

1. What milestones do you think would have been appropriate for Facebook
to establish early on to help evaluate the merits of the venture and to
attract outside funding?

2. How would you characterise the various stages of development that
Facebook went through up to its IPO?

3. What stages of financing has Facebook gone through? How do the
financing stages correspond to the milestones you identified in Question 1
and the development stages in Question 2?

4. Explain how Facebook’s valuation has evolved over time.

5. Consider the Facebook IPO in early 2012. Why do you think Zuckerberg
decided to undertake an IPO at that time? In retrospect, do you think
investors were receptive to it?

12.11 REVISION QUESTIONS

1. What do you believe are the main contextual differences between finance
in a new venture setting and finance in a large corporation?

2. Classify the main types of options open to an investor and entrepreneur in
structuring an investment deal. Why do you think “real” options are useful
in entrepreneurial finance?

3. Explain the concept of milestone financing, indicating why it might be
beneficial to both the outside investor and the entrepreneur. How can
staging of finance reduce the information and incentive problems facing a
new venture?

4. Consider an investment deal in which the entrepreneur retains 800,000
shares. The investor is willing to contribute €2 million for an additional
400,000 shares. Calculate the “pre-money valuation” and “post-money
valuation” and explain the difference in the concepts.

5. As a new entrepreneur with little track record or credibility, how might you
go about convincing an outside investor to invest in your business?

6. Explain what is meant by due diligence, and why it is important for the
investor.

7. Explain the difference between profitability and cashflow. Why is cashflow
particularly important for new ventures?

8. Explain how the valuation of a new venture can be conducted based on its
projected future cashflows. Even if an outside investor and entrepreneur
agree about projections for future cashflows, why might their valuations
differ?

9. Why do venture capital investment deals tend to provide the investor with
convertible preferred stock rather than equity or debt?

10. Explain the concept of a ratchet as an anti-dilution mechanism. Why are
ratchets common in financing new ventures?

11. What is a business angel, and how does this type of investor differ from a
professional (institutional) venture capitalist?

12. What are the main mechanisms by which an entrepreneur can exit
(partially or fully) a business and harvest the rewards?

13. One option for financing a business is to seek credit from a bank. How
might the business plan be prepared differently for a bank from one
prepared for a cash-for-equity investor, such as a business angel?

14. What are the main challenges and benefits of taking a private company
public?

15. Briefly outline what terms and conditions you would expect to see in a term
sheet.

16. Briefly describe the different types of crowdfunding platforms that
entrepreneurs can use to raise finance for their new venture.

17. What are the main challenges that investors using crowdfunding face?

18. What are the main advantages of co-funded investments?

19. Why is the NPV method difficult to apply to the valuation of new ventures?

20. Briefly explain the difference between accelerators and incubators.

12.1
2 FURTHER READING AND RESOURCES

Adelman, P.J. and Marks, A.M. (2010) Entrepreneurial Finance for Small Business.
Upper Saddle River: Prentice-Hall.

Leach, C. and Melicher, R. (2011) Entrepreneurial Finance. Stamford: Cengage.
McKaskill, T. (2009) Raising Angel & Venture Capital Finance,

www.tommckaskill.com/ebooks.html.
Smith, J. and Smith, R.L. (2011) Entrepreneurial Finance, Strategy, Valuation, and

Deal Structure. Hoboken: Wiley.

12.1

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Equity Crowdfunding”, Entrepreneurship Theory and Practice, 39(4): 955–980.

BDRC (2018) SME Finance Montior: Q3 2017, Report by BDRC Continental.
Belleflamme, P., Lambert, T. and Schwienbacher, A. (2014) “Crowdfunding: Tapping

the Right Crowd”, Journal of Business Venturing, 29(5): 585–609.
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Harvard Business Review, 63(5): 184–197.
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12.1
4 GLOSSARY OF TERMS

3x A colloquial term in the investment community. A 3× return
equates to 300 per cent. A 5× return equates to 500 per cent.

Black-Scholes A mathematical formula that provides a theoretical calculation
Formula for pricing financial options.

Business Angel An investor (often a wealthy individual or network of
individuals) who provides revenue to small start-up firms or
entrepreneurs. Business angels are often successful
entrepreneurs themselves. They are usually investing in the
person rather than the firm.

Collateral Property or assets that a borrower gives to a lender in order to
secure a loan.

Common Stock Shareholders with common stock are at the bottom of the
priority ladder for ownership structure. If a company goes
bankrupt, common shareholders will only receive their money
after creditors and preferred shareholders have received their
share of the leftover assets.

Convertible Stock A type of preferred stock that can be exchanged into shares of
common stock.

Covenant A promise in a financial contract that certain activities will or
will not be carried out. Covenants are often requested, in the
form of debt-to-asset ratios, by lenders to protect them from
borrowers defaulting on their obligations due to financial
actions detrimental to themselves or the business.

Crowdfunding The practice of funding a new venture or project by raising
small amounts of money from a large number of people,
typically online.

Debt An amount of money borrowed by one party from another.
Debt can come in a number of forms, including bonds and
loans.

Due Diligence The care and thought that an investor should employ prior to
entering into an agreement/transaction with another party.

Equity The ownership of any asset after all debts associated with that
asset are paid off.

Factoring A financing method that involves a business owner trading
their accounts receivable to a third party at a discount in order
to raise capital.

First-Mover A type of competitive advantage that a company acquires by
Advantage being the first to enter a new market.

Free Cashflow The money that an organisation can generate after putting aside
the money needed to maintain or grow its asset base. Free
cashflow allows organisations to pursue new opportunities,
such as the development of new products.

Initial Public When a privately owned company becomes publicly traded on
Offering (IPO) the stock exchange, giving the right to members of the public
to buy shares. IPOs are often issued by young companies
seeking large amounts of capital to expand.

Innovation Provides organisations in their early stages with funding in
Voucher order to overcome challenges relating to innovation.

Leveraged Buy- The acquisition of another company using a large portion of

Out borrowed money. The purpose of leveraged buy-outs is to
allow organisations to make large acquisitions without having
to commit a large amount of revenue.

Liquidity Event Start-up companies are said to be “illiquid” because their
shares are not traded on a public stock exchange and are
therefore not easily sold. A liquidity event is an exit strategy
for an illiquid investment. It allows the initial investors to cash
in some or all of their ownership shares.

Management A situation where the management of a firm buys a controlling
Buy-Out interest in the firm from the existing majority shareholders.

New Present The difference between the present value of cash inflows and
Value (NPV) the present value of outflows. If the NPV is positive, cashflows
will also be positive; if the NPV is negative, cashflows will
also be negative.

Preferred Stock Preferred stock shareholders have a higher claim on assets and
earnings than common stock shareholders. Preferred stock
must be paid out prior to dividends to common stockholders.

Profit The amount of money an organisation makes from a business
activity after paying all of the expenses incurred.

Price-to-Earnings The P/E ratio is a multiple used to value equity in a company.

(P/E) For example, if stock is trading at $16 and the earnings per

share for the most recent

Ratio 12-month period is $4, then the stock has a P/E ratio of 16/4 or
4.

Ratchet An anti-dilution provision that gives the investor protection
from dilution of value in the event of subsequent financing at a
lower valuation.

Senior Debt The borrowed money or loans that a company must repay first
if it goes bankrupt.

SBIC Small Business Investing Companies are privately owned
investing companies that provide small businesses with
financing.

Stock Option A right sold by one party to another that gives the buyer the
right to buy or sell stock at an agreed price within a certain
time frame or on a certain date.

Subordinate Debt The borrowed money or loan that ranks below other loans.
Subordinate debt will be paid only after senior debt has been
paid in full.

Term Sheet A template outlining the basic terms and conditions under
which an investment will be made. It provides a basis for a
legally binding agreement.

Trade Sale The selling of a new venture’s total assets or part of its assets to
another organisation.

Valuation The method of estimating the net worth of an asset or a
company.

Venture Capital Money supplied by institutional investors to start-up firms and
small businesses with perceived long-term growth potential.

Warrant Similar to an option, a warrant is a security that gives the
owner the right to buy the underlying stock of the issuing

company at a fixed exercise price until the expiry date.
Warrants are frequently attached to preference shares.

INDEX

A
achievement, 49–50
adaptation, 340, 367
Adizes, Ichak, 307
administrating, 328
administrating role, 308
adopter categories, 117, 120–124
advertising, 258–62
Aerogen Ltd, xxiii
age, 48
agents, 346, 367
Ahlers, G.K., 381
Allergy Standards Limited (ASL), xx, 89–91
Amazon.com, 108, 189
ambidextrous organisations, 130
American Marketing Association (AMA), 225
ancillary costs, 150–1
Anderson, T.R., 84
Android phones, 221
angel investors, 379, 383, 398, 399, 402
Angry Birds, xx, 50–53
appendices, of business plan, 284
Apple, 111, 141, 221, 313
Apple App Store, 108
artificial intelligence (AI), 6

copyright, 144
patents, 142
trademarks, 144
assets, 183
assignment, 170
Association of University Technology Managers (AUTM), 64
Audretsch, D.B., 9
avoidable errors, 319

B
Baker, M.J., 201
Baron, R.A., 37, 43

Baycrest, 162–3
Bayh–Dole Act, 39, 60, 64, 153
BehavioSec, 44
behavioural segmentation, 244
beta-site testing, 222–3
biotechnical innovation, xxi
biotechnology, 6
Black-Scholes formula, 409
blame game, 319
Block, J., 401
Bollinger, L., 40
Bozeman, B., 84, 85
brand, 277
brand equity, 256, 277
branding, 255–6, 277
breakthrough innovation, 109
Bruton, G., 380
burn rate, 303
business concepts, 104, 173, 175, 198, 218–24, 238
Business Consulting Solutions (BCS), 267–8
business customers, 243–4
Business Expansion Scheme (BES) funding, 89
business idea, 174–5
business managers, 105
business models/modelling, xxi, xvi, 102, 111, 173–99

advantages of, 179–80
bringing product to market, 182–3
on business plan, 282
case study, 193–5
for competitive advantage, 187–9
components of, 179, 180
configurations, 180–1
defined, 198
dynamics, 180
experimentation with, 186–7
growth metrics, 189–91
holistic view of, 187
industry-driven, 185–7
innovation in, 113
integrated, 187
new, 179
outsourced, 187
parternships, 184–5
revenue model, 182
scalable, 192
talent, capabilities, and assets, 183
types of, 187
value networks, 183–5

value proposition, 182
business plans, 279–84

components of, 280–4
business relationships, 184–5
business–to–business (B2) markets, 212, 252–3, 253, 257
buyers, 202
buyer-seller exchange relationships, 202–4

C
Cantillon, Richard, 37, 38
Cantner, U., 10
capabilities, 183
capital

human, 301, 302, 354
market, 301
structural, 301
venture, 39, 303
Carbon Recycling International, 181
Cardon, M.F., 44
career context, 43
Carter, S., 46
causal research, 227, 238
channel intermediaries, 264–5
channel structure, 277
Chapple, W., 60
chasm, 123, 130
China, 346, 347
Christensen, C.M., 110–111
Clark, C., 285
cloud-based services, 111
coalition building, 127
Coca-Cola, 145
cohort analysis, 190
collaboration, 112, 305
collaborators, 214
collateral, 385, 409
commercial enterprises, 212
commercialisation, 39, 41, 124, 153
customer segments, 158
geographical markets, 158
licensing route, 161–3
new venture formation, 163–4
pitching and, 285–90
principles, 156–7
promoters, 164–5
provision of service, 159–60
reasons for, 156–8
timing, 158–9

common stock, 386, 387, 409
communication decisions, 257–62
company culture, 328
company description, on business plan, 282
company website, 260
compatibility, 119
competing stakeholder interests, 86
competition, 177–8, 270, 347–8
competition–based pricing, 270, 277
competitive advantage, 179, 187–9, 295
competitive analysis, 238
competitiveness, 353–5
competitors, 212–13
complexity, 119
conception, 141
concept testing, 219
conducting due diligence, 392–3
confidential information, 146
configuration of value, 176–8, 198
confirmation, 120
conjoint analysis, 220–1, 238
Conpart, 114
conservatives, 123
constructivists, 125
consumer markets, 212, 213, 252–3, 257–9
context, 40, 43, 210–12
contingent planning, 100
contrary forces, 126–129
control, 49
convertible stock, 388, 409
copyright, 139, 144–5, 146, 149

infringement of, 155–6
on software, 155
corporate decision–making, 375
corporate entrepreneurship, 130
cost-plus pricing, 269, 277
costs, 269
Coughter, P., 285
country risk, 347
covenant, 409
creative destruction, 105
critical risks, on business plan, 284
cross-price elasticity of demand, 268
cross-subsidisation, 187
crowdfunding, 16–17, 402, 409
crowdsourcing, 198, 224, 238
culture, 312–14, 318, 359–60
customer–driven innovation, 223–4

customers, 270–2
analysis of, 214–15
business, 243–4
organisational, 243–4
target, 182–3
targeting, 242–7

customer segments, 158, 242–7, 337
customer value, 182, 187, 190
customer value-based pricing, 271

D
Daintel, 250–1
D’Aloisio, N., 47
data analysis, 230, 238
data collection, 225, 227–9
David, F., 63
decision, 120
delegation, 307
demand uncertainty, 347
demographic segmentation, 244
Denmark, 332
descriptive research, 227, 238
design registration, 149, 156
designs, 139, 142–3, 146–7
Dew, N., 126, 322
Diamond v. Diehr, 155
diffusion, of innovation, 118–124
direct distribution channel, 263–4, 277
direct exporting, 343, 346, 367
direct selling, 258
discovery driven planning, 100
disruptive, 289
disruptive innovation, 110–112, 218–19, 239, 289
distribution, 191, 262–6, 277
distributors, 346, 367
doers, 328
drag along, 388
drive, 49
Dropbox, 222
Drucker, P.F., 38
D3 Technologies Ltd, 17–19
due diligence, 409
Durcker, J., 84
dynamic capabilities, 198
dynamic capabilities view (DCV), 188, 353
Dyson, 37, 38

E

early adopters, 117, 118, 120–2, 223
early majority, 119–21
Earnings Before Interest and tax (EBIDTA), 393
economists, 126
educational attainment, 48
effectuation approach, 126
electrical vehicles (EVs), 107
emotions, 44
engagement, 191, 261
entrepreneurial ecosystems, 2, 9–10
entrepreneurial finance, 400–1

early-stage funding, 379–86
harvesting, 397–400
ipos, 373
negotiating with investors, 386–8
entrepreneurial intent, 50
entrepreneurial marketing (EM), 241
entrepreneurial process, 39, 40
entrepreneurial teams, 305, 306, 328
entrepreneurial universities, 7, 81
entrepreneuring role, 307–8
entrepreneurs
benefits of, 38
characteristics of, 42–48
competitiveness of, 353–4
defined, 37–41, 368
international, 331–4, 368
motivations of, 49–50
role of, 105
serial, 126
entrepreneurship. see also technology entrepreneurship
convergent technology spaces, 16
corporate, 130
crowdfunding, 16–17
defined, 37–41
gig economy, 15
growth of, 39
IoT, 15–16
OECD new enterprise creations, 11, 12
policy conditions, 6–10
policy outcomes and impacts, 11–15
entry strategies, for foreign markets, 340–7, 368
environmental scanning, 209–10, 238
equity, 409
errors, 318–22
Etzkowitz, H., 7, 8
European Patent Convention (EPC), 170
European Patent Office (EPO), 148, 154

European Union (EU), 13
European Union Intellectua Property Office (EUIPO), 149, 155
Evan, D.J., 41
exchange relationships, 202–4
executive summary, of business plan, 281
exit options/strategies, 290
exit strategies, 397–400
expansion stage, 312
experience curve, 269
exploitation, 130
exploratory research, 227, 238
exporting, 343, 346, 368
extended organisation, 316
external barriers to growth, 304, 328
external finance, 377, 378, 400

F
Facebook, 204, 373, 374
factoring, 409
failure, 129

intelligent failures, 320
earning from, 317–22
Fakhro, A., 399
false summit effect, 125
Falshaw, J.R., 279
family context, 49
Fanning, S., 145
fieldwork, 230
financial data, on business plan, 284
financial rewards, 46
financial statements, 389–90
financing decisions, xxiii
firm growth
analysing and managing for, 302–4
barriers to, 302, 304
defined, 296
external conditions for, 304
high-tech venture growth model, 297, 300
internal conditions for, 303–4
rapid, 317–18
stages of, 312
types of, 297
firm level competitiveness, 354–5
firm size, 346
first Chicago method, 396
first-mover advantage, 409
5C framework analysis, 210–15
fixed costs, 269, 278

Fjeldstad, 176–8
focus groups, 219, 229
food processing, xvi
foreign direct investment (FDI), 345, 346, 368
forming, 328
forming-storming-norming-performing framework, 309, 328
founding process, 40
4 Ps of marketing, 252–3
franchising, 344, 368
free cash flow (FCF), 393, 409
freemium models, 187
Friedman, J., 65, 81
frustration, as source of innovation, 314–15
funding requirements, 290
funnel metrics, 190

G
Gaster, R., 83
geodemographic segmentation, 244
geographical markets, 158
gig economy, 15
Gillette, 187
Global Entrepreneurship Monitor (GEM), 48
globalisation, 115
global marketplace, 1
global mindset, 354
global phone directory, 185–6
goal setting, 50
Goldstein, H., 84
Google, 185, 191, 256
Google Play, 108
government, 8

support by, 41
government agencies, 212
Graff, G., 67
Greene, F.J., 280
green technologies, xvi
Gregson, G., 372
growing pains, 322
growth metrics, 189–91, 199
growth stage, 312
Guerrero, M., 7

H
Hall, E.T., 360
Harmon, B., 61, 62
Harrison, R.T., 371, 379
harvesting, 397–400

Henderson, R., 66
high-context cultures, 368
higher education provider, 68–80
high-growth ventures, 302–3
high-reliability organisations, 320
high-tech entrepreneurship, 11

in Europe, 13, 14
high-tech life cycle (TALC), 266
high-tech markets, pricing in, 269–72
HMS Ltd., xxii, 273–5
holistic entrepreneurship policy, 7
hollow company, 317
Honig, B., 280
Hopp, C., 280
horizontal relationships, 184–5, 214
horizontal segments, 278
Houston, Drew, 222
Howells, J., 62
human capital, 301, 302, 328, 354
human capital factors, 88
hybrid distribution channel, 278
hybrid electroc vehicles (HEVs), 105
hybrid options, 368

I
IKEA, 106, 107
implementation, 120
inception stage, 312
incremental innovation, 108–109, 218, 238
independence, 49
indirect distribution channel, 264, 265, 278
individual innovativeness theory, 118
industrial designs, 170
industry, 7–8
industry analysis, 211, 239
industry-driven business models, 185–7
industry events, 259
inevitable errors, 320
information and communication technologies (ICT), 6, 112
infrastructure innovations, 106–108
infringement, 155–6, 170
initial public offerings (IPO), 373
innovation, 104

adoption of, 117
business model, 112
classification of, 105–113
contrary forces of, 126–129
customer-driven, 223–4

decision process theory, 118
defined, 104–105
diffusion of, 118–124
disruptive, 110–112, 218–19, 239
incremental, 108–109, 218
infrastructure, 106–108
vs. invention, 104
investments, 129
management, 124–129, 304–5, 328
open, 112
organisational, 113
perceived attributes of, 118
platform, 108
policy conditions, 6–10
policy outcomes and impacts, 11–15
process, 113
product vs. process, 105–106
radical, 108–110, 218–19, 221–4, 239
sources of, 113–115
speed of, 115
teams, 305
technology innovation life cycle, 115–116
user–driven, 115
value, 176
voucher, 409
innovativeness, 118
innovators, 118, 121, 122
inorganic growth, 297
nstitutional inhibitors, 87–88
nstitutions, 212
nsurance, 156
ntegrated business models, 187
ntegrated marketing communications, 262, 278
integrating, 329
integrating barriers to growth, 329
integrating role, 308
intellectual capacity (IC), 301
intellectual property (IP), xxi, 100, 101, 138–72
capturing, 151–2, 165
case study, 166–7
costs, 149–51
defined, 139–40
geographic coverage of rights, 147
information sources for, 155
infringement of, 155–6
insurance, 156
patent searches, 154–5
policies, 153

protection of, 139–40, 146–51
rights, 140–6, 147
rights enforcement, 155–6
routes to commercialisation, 156–65
software protection, 155
strategy design for, 151–3
intelligent failures, 320
interdisciplinary teams, 310–11
internal barriers to growth, 304–5
international entrepreneurship, 331–4, 368
international experience, 346
internationalisation, 330–69
adaptation, 340, 368
competitiveness, 353–5
considerations for, 334
cultural considerations, 359–60
entry strategies, 340–7
external factors affecting, 347–8
foreign market selection, 337–41
internal factors affecting, 346–7
key drivers of, 334–6
marketing, 333–4
mediating forces, 335–7
push and pull forces, 334–6
standardisation, 340
strategic options for, 369
international marketing, 333–4, 368
international new ventures (INVs), 331, 353, 368
Internet, 108, 110, 257, 260, 347, 368
Internet advertising, 260
Internet-based companies, 191
Internet of Things (loT), 15–16
Internet research, 227–8
intrapreneurship, 130
invention, 104, 140–2, 170
invention disclosure forms (IDFs), 152
inventive step, 170
inventor involvement, 86
inventors, 170
investment decisions, xxiii
investments in innovation, 129
investors, pitching to, 285–90
iPhone, 221
IP valuation, 86
Ireland, 332
Isenberg, D., 9
iterative processes, 126
iTunes, 111

J
Japanese Patent Office, 154
job creation, 6
joint ventures, 344, 346, 368

K
Karlsson, T., 280
key metrics, 189–91
keyword metrics, 190
Kim, S.M., 279
know-how, 147
knowledge, 6

exploration, 127
of innovation, 118
knowledge-intensive services (KIS), 14
knowledge transfer partnership, 8
Kodak, 186
Kraemer-Eis, H., 371
Kremic, T., 60, 61

L
Lach, S., 67
laggards, 119, 123, 124
Lange, J.E., 280, 379
laparoscopy, 313
late majority, 119, 123
ayered communication, 286
leadership, 311–15
leadership skills, 305–6
lead users, 115, 223
lead user testing, 223
lean start-up approach, 100, 126, 190, 303
learning

curving, 269
measuring, 189–91
from successes and failures, 317–22
by teams, 318–19
leveraged buyout, 409
Leydesdorff, L., 7
license, 170
licensing, 66–67, 161–3, 343, 368
liquidity event, 410
localisation, 368
lock-in, 128
low-context cultures, 368
Lundström, A., 13

M

MacKinlay, C., 62
macro-context, 210–11
macro-level factors, 82–84
management, 115

for growth, 302–4
innovation, 115, 124–129, 304–5
of intellectual property, 138–72
of iteration, 126
in networks, 125–126
of uncertainty, 125
management buyout, 410
managerial experience, 47
margin for error, 290
marketable products, 37
market analysis
business concept testing, 218–24
on business plan, 282
environmental scanning, 209–10
5C framework, 210–15
structured, 212
SWOT analysis, 215–16
market capital, 301
market dynamics, 116
market ecosystem, 239
market growth, 347
marketing
defined, 201, 202, 204
ecosystem, 209–17
exchange relationships and, 202–4
4 Ps of, 252–3
importance of, 201
international, 333–4, 368
relationship, 259
technology entrepreneurship and, 204–5
marketing communications, 257–62, 278
marketing mix, 204
marketing plan, 272
marketing programme, 252–3, 340
marketing research
conducting, 225–30
data analysis, 230
data collection, 227–9
defined, 225
fieldwork, 230
formulating objectives for, 225–7
presentation of findings, 230
research design, 227
sampling, 229–30

marketing strategy, 201, 204, 241–78
branding, 253–6
on business plan, 283
case study, 273–5
defined, 278
designing, 252–3
distribution decisions, 262–6
entrepreneurial marketing, 241
formulation of, 225–7, 242
for international markets, 336–7
market segmentation and targeting, 242–7
pricing decisions, 266–72
product decisions, 253–4
promotion and communication decisions, 257–62
value proposition development and positioning, 247–52

market pull, 108, 109
markets, 202

consumer, 212, 213, 252–3, 257–9
international, 337–41
knowledge of, 289
organisational (B2B), 212, 252–3, 253, 257, 259, 261–2
market segmentation, 242–7, 278
market size, 347
market-skimming pricing, 271–2, 278
market validation, 207–24, 239
on business plan, 282
external market environment and, 209–17
outcome, 215–16
process, xxi, 208–9
Markman, G.D., 60
Mason, C.M., 371, 379
material science, xvi
maturity stage, 312
McClelland, D., 50
McGrath, R.G., 179, 187, 189
McKinsey, 16
media advertising, 258
mediating forces, 335, 368
medicine, 112
medtech sector, 337
Meltwater Ltd., xxiii, 323–4
meso-context, 211–12
micro-level analysis, 215–17
micro-level factors, 84–86
micro-particles, 114
Microsoft, 111
migration plan, 115
mistakes, 319–21

mobile advertising, 260
mobilisation, 127
momentum, 290
money, 46
Moore, G., 120–124, 130, 223
Moore’s law, 185
motivations, 46, 49–50
Mowery, D.C., 8
mp3 file format, 111
Mulally, A., 321
multinational companies (MNCs), 10, 337

N
nano-and biotechnology, xvi
nanotechnology, 166–7
Napster, 145
Nepelski, D., 11, 13
networking capabilities, 354
network organisation, 315–16
networks, 125–126

value, 183–5, 214, 239
new media, 257
new present value (NPV), 410
new technology ventures, 2, 36–53, 295–300

intellectual property management for, 138–72
international, 331, 368
leadership of, 311–15
NextNet, 183–4
non–disclosure agreement (NDA), 146
norming, 309, 329
Norway, 332
novelty, 140, 170

O
Obama, B., 16
objective capabilities, 354, 369
observability, 119
online communication, 257, 260
open innovation, 111
OpenText, 333
operational plan, on business plan, 283
operations decisions, 388–91
opinion leaders, 259
opportunities, 125

exploration of, 130
opportunity analysis, on business plan, 282
opportunity recognition, 44
options, 396–7

organic growth, 297
organisational adaptability, 354, 369
organisational culture, 314, 317–18
organisational customers, 243–4
organisational (B2B) markets, 212, 252–3, 257, 259, 261–2
Organisation for Economic Co-operation and Development (OECD), 8
organisational innovation, 113
O’Shea, R.P., 67
Osterwalder, A., 175, 180, 182, 187
Osterwalder canvas, 180
outsourced business models, 187
overplanning, 125

P
PAEI team framework, 307–8
partnerships, 183–5, 346
passion, 50
patentability, 171
Patent Cooperation Treaty (PCT), 148, 171
patent pending, 171
patents, 66, 140–2, 147

information sources for, 154–5
infringement of, 155–6
searching, 154–5
path dependency, 128
Pearce, J., 63
perception, 43
per-customer metrics, 190
performing, 309, 329
personal interviewing, 219–20
personal selling, 258, 259, 261
persuasion, 120
piggyback option, 388
pitching, 38, 285–90
platform innovations, 106–108
Pocket Anatomy, 341
Porter, M.E., 176, 177
positioning, 247–8, 278
post-money valuation, 387–8
Pragmatic Diagnostics, 216–17
pragmatists, 120, 122, 123
preferred stock, 410
price, 278
price elasticity, 268
price-to-earnings (P/E), 410
pricing decisions, 266–72, 278
primary data collection, 228, 239
print advertising, 258

prior art, 171
priority, 171
process innovations, 105–106, 113
producing, 308, 329
producing role, 308
product anatomy, 254–5, 278
product concepts, 219
product decisions, 253–4
product designs, 150
product development, 218–19
product diversification, 354
product innovations, 105–106
product life cycle (PLC), 106, 282–3
product-market fit, xix, xvi
products

bringing to market, 182–3
characteristics of, 346–7
positioning, 247–8
product section, of business plan, 282–3
profit, 410
Programme for Internationa Student Assessment (PISA), 9
project inhibitors, 88
promotion, 257–62, 278
protection of, 282–3
Protein Analyze Ltd., 160
prototypes, 219, 222, 239
provisional patent applications, 171
psychographic segmentation, 244
psychological safety, 329
publicity, 258
public relations, 258
pull forces, 334–6, 369
push forces, 334–6
put provision, 388

Q
qualitative research, 229, 239
quantitative research, 229, 230, 239

R
radical innovation, 106–108, 218–19, 221–4, 239
rapid growth, 317–18
ratchet, 410
rate of adoption theory, 118
ratio, 410
razor-blade business model, 187
realists, 125
reduction-to-practice, 141–2

reflective leadership, 312
Reinshaw Diagnostics Ltd., xx
relationship management, 259, 261
relationship marketing, 259
relative advantage, 119
renishaw diagnostics Ltd., 17–19
research and development (R&D)

costs, 332
time for, 305
research objectives, 225–7
resource analysis, 215–17
resource appropriation, 44
resource-based view (RBV), 188, 199
resourcing, 283
return on investment, 387
revenue, 191
revenue model, 182
rewards, 46
Ries, Eric, 126, 130, 189
risk, 40, 45, 284
risk profile, 43
risk taking, 38, 50
Roberts, E.B., 50
Rogers, Everett M., 118–120
Rosenberg, N., 125, 126
Rothaermel, F.T., 80
Rovio Entertainment, xx, 50–53

S
Saarikko, T., 15
sales promotions, 258
sales strategy, on business plan, 283
Salma, 130–132
sampling, 229–30, 239
Samsung, 141
Sarasvathy, S., 126, 322
SAVE model, 252
Saverin, E., 374, 404
scalable business models, 102, 192
sceptics, 123, 124
Schankerman, M., 67
Schwienbacher, A., 371
scientific method, 124
S-curve, of innovation diffusion, 116
search report, 171
secondary data collection, 227–8, 230, 239
self-efficacy, 50
senior debt, 386, 409, 410

serial entrepreneurs, 126
service characteristics, 346–7
services dominant logic, 254, 278
service section, of business plan, 282–3
Shane, S., 40
Siegel, D.S., 61, 64, 84, 85
Silberman, J., 65, 81
Silicon Valley, 40, 305
Skype, 231–4
small and medium enterprises (SMEs), 14, 337
small business investing companies (SBICs), 410
smart economies, 6
social relationships, 184–5
sociocultural distance, 347
software-as-a-service (SaaS), 106
software protection, 155
SoundCloud, 48
Southwest Airlines, 180
Spigel, B., 9
Spinosa, C., 314–15
spin-outs, 285
split-testing, 190
Spotify Inc., xxi, 102, 108, 193–5
Stabell, C., 176–8
standardisation, 369
standardised marketing programmes, 340
start-ups, 39, 49, 316–17
start-up schedule, 284
state-of-the-art, 171
Steel, J., 285
stock options, 376, 410
storming, 309, 329
strategic alliances, 344, 346, 369
strategic attributes, 369
strategic options, for internationalisation, 336–7, 369
structural capital, 301
structured market analysis, 212
subjective capabilities, 354, 369
subordinate debt, 410
Subotzky, G., 7
successes, learning from, 317–22
Surecom Network Solutions, 245–6
surveys, 229
SWOT analysis, 215–16

T
tag along, 388
talent, 183, 283

Tarde, G., 117
target customers, 182–3
targeting, 278
target markets, 246
teaming, 329
teams

building, 304–7
composing, 305–6
developing, 308–11
diverse, 305–6
dynamics, 308–10
entrepreneurial, 305, 306
expectations and agreements for, 306
innovation, 305
interdisciplinary, 310–11
learning by, 318–19
recruiting, 306
roles, 307–8
team capabilities, 283, 288–9
technologists, 126
technology, 354
Technology Adoption Life Cycle (TALC), 120–4
technology-based firms, 40–41
technology-based service innovations, 106
technology-based venture, 1
technology enthusiasts, 120–2
technology entrepreneurs, 2, 36–53
characteristics of, 42–48
defined, 37–42
intentions of, 49–50
motivations of, 49–50
TTOs, 64
technology entrepreneurship, 2
characteristics of, 42–48
convergent technology spaces, 16
crowdfunding, 16–17
defined, xv
in Europe, 11, 13, 14
gig economy, 15
growth of, 39
IoT, 15–16
marketing and, 204
OECD new enterprise

creations, 11, 12
policy outcomes and impacts, 11–15
technology innovation life cycle, 115–116
technology push, 108, 110
technology strategy, 40

technology transfer, 3, 172
company formations, 67, 80
effectiveness criteria, 85
government and corporate approaches, 60, 61
higher education provider, 68–80
inhibitors to, 86–88
licensing, 66–67
linear model of, 61–62
macro-level factors, 82–84
and mechanisms, 65–80
micro–level factors, 84–86
non-linear model of, 62–63
patents, 66
stimulants and barriers to, 80–88
third-level institutions, 60
from university to industry, 65

technology transfer policy, 86
technology trends, 152–3
technopreneurs, xv
techno-science, 124
Teece, D., 180, 187
tenure, 172
term sheet, 410
Tesla, 107
testbeds, 130
theory of diffusion, 116
theory of perceived attributes, 119
third-mission activities, xx
Toyota Prius, 105
trade barriers, 334, 347
trademarks, 139, 143–4, 146, 149, 150, 156, 255
trade names, 255
trade sale, 388, 395, 398–401, 410
trade secrets, 145
trade shows, 259
Tran, K. C., 181
translation, 124
trialability, 119
triple helix approach, 2, 7–9
Truecaller, 185–6
Tunguz, T., 191
type-A personality, 49

U
Uber, 175
uncertainty, 45, 125, 130
United States, Bayh-Dole Act, 39, 153
unit-one costs, 269

universities, 7
linkages with, 41

unlocking provision, 388
user-driven innovation, 115
US Patent and Trade Mark Office (USPTO), 154

V
valley of death, 45, 47
valuation, 410
valuation primer, 393, 395–7
value added resellers (VARs), 264
value capture, 182, 187–8, 199
value chain, 176, 177, 199
value configurations, 176–8, 199
value creation, 175–8, 182, 187–8
value innovation, 176, 199
value networks, 176, 178, 183–5, 199, 214, 239
value propositions, 175, 182, 186–7, 199, 204, 239, 282

communicating, 257–62
developing and positioning, 247–52
validating, 207–24
value shops, 176–8, 199
vanity metrics, 189
Van Roy, V., 11, 13
variable costs, 269, 278
Venkataraman, S., 40
venture capital, 39, 172, 294, 303, 410
venture capital method, 395–6
venture creation, 11
vertical relationships, 184–5, 214
vertical segments, 278
viral communications, 260
virtual prototypes, 222
vision, 174–5, 199, 282
visionaries, 120–2
Von Hippel, E., 223

W
Ward, T.B., 45
warrant, 410
web-based technologies, xvi
website, 260
Web 2.0 technologies, 260
Web 3.0 technologies, 260
Weick, K., 320
Wickham, P.A., 316
work experience, 47
World Bank, 9

World Intellectual Property Organization (WIPO), 144

Y
Yahoo, 185

Z
Zuckerberg, M., 373–4