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This lecture covers various business structures, including the difference between for-profit, non-profit, and alternative paths to entrepreneurship. Discover the right questions entrepreneurs must ask before committing to building a business. What are the requirements and resources you need to have in place to get started? What are the types of financing―and how do they work and why do they matter to different kinds of entrepreneurs?
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Developing talent • G
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Our Future Ma9ers
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08 October 2014 Different Types of Entrepreneurship
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Visit us at marsdd.com
Different Types of Entrepreneurship Entrepreneurship 101
P R E S E N T E D B Y A L L Y S O N H E W I T T , S E N I O R F E L L O W, S O C I A L I N N O V A T I O N & D I R E C T O R , S I G @ M A R S
A N D K E R R I G O L D E N , P A R T N E R , J O L T F U N D A N D D I R E C T O R ,
U R B A N F L A T S T O R O N T O
O C T O B E R 2 0 1 4
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“ What we will cover today:
§ Self Assessment
§ Corporate Structure Op\ons
- Con\nuum from Charity to For Profit
§ Types of Businesses: both tradi\onal and social ventures
- Consul\ng
- Services
- Products
- The Sharing Economy
- Scale and Profiles for Business Types
§ Forms of Financing
§ Sources of Financing
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SELF ASSESSMENT
pg 4
What is my business structure? - For profit? - Not-‐for-‐profit? - Co-‐opera\ve? - Hybrid
Why do I want to start this business? - What is my mo\va\on?
Do I have the skills/ ap\tude to be an entrepreneur? - Am I comfortable taking risks? - Is this something I feel I have to do?
What resources do I need?
- Basement or corporate office? - Shared spaces/incubators?
How do I fit into the rest of the world? - Is my product and/or service unique? - Have others tried this before?
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Return Con0nuum
Grant Funded Non-‐Profit (Charity)
RETURN
Social (Charitable) Financial (Commercial)
Tradi=onal Business
Revenue Genera=ng NFP (Social Enterprise)
Social Purpose Business
Blended Value Space
Social Ventures
Coopera=ves
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BLURRING OF THE SECTORS
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SOCIAL ENTERPRISE
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SOCIAL PURPOSE BUSINESS
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CONSULTING • Key Characteris\cs
– Mul\ple par\cipants, diverse focus, variable size, leverage core assets to provide access to market and advice
• Examples
– Consul\ng: McKinsey, Bain, Deloi9e, IBM, Hatch
– Aperio, Purpose Capital
• Benefits & Risks of Model
– Low capital costs and minimal set-‐up
– Leverages specialized knowledge/experience
– Liability insurance, can be difficult to build/scale
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SERVICES • Key Characteris\cs
– Speciality business serving consumers or other businesses
• Examples
• Benefits & Risks of Model
– Online sofware as a service
– Infrastructure costs may be high: ini\al development, servers, support, staffing
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SERVICES Tradi\onal Courier Services
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SERVICES Social Enterprise Courier Services
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PRODUCTS
pg 13
• Key Characteris\cs – Tangible offering (consumer products, pharmaceu\cals, equipment or devices)
• Examples
• Benefits & Risks of Model
– Higher development costs; marke\ng
– Sales and distribu\on model
– Produc\on costs high, outsource?
– Poten\al for scale – huge
– Trends: collabora\ve consump\on, wearable technology
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SOCIAL ENTERPRISE PRODUCTS
pg 14
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SHARING ECONOMY
pg 15
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EMPLOYER BUSINESSES – 1.1M strong
pg 16
Source: Sta=s=cs Canada
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SCALE AND PROFILE OF BUSINESS TYPES
• Lifestyle business – Part-‐\me Yoga Instructor
– Ofen a hobby of the owner • SMEs – “engine of the economy”
– Founded 2009, employs 5+
– Profitable, Growth 10-‐15% per year • Growth Companies -‐ Hootsuite
– Founded 2008, 500 employees and growing – 10M+ users, including 744 of Fortune 1000
• VC/PE study es\mated 13,000 high growth companies in Canada
pg 17
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FORMS OF FINANCING
• Forms of Financing – Bootstrap -‐ self-‐fund and reinvest all profits for growth
– Crowdfunding – for product pre-‐orders, films, games, projects
-‐ Crowdfunding – tailored for causes and chari\es
– Fundraising -‐ grants/ founda\ons/ government funding/ corporate sponsorship/ members (co-‐ops)
pg 18
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DEMONSTRATE IMPACT
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DEBT AND EQUITY
pg 20
• A quick primer on debt versus equity:
q Debt:
• gets paid back first, before any dividends get paid
• secured by assets (company, your personal)
• once debt is repaid (with interest of course), lender gets nothing else
q Equity:
• never has to be “repaid”
• keeps on “paying” forever
• you now have an investor partner who is in this, like you, for the long haul
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MOBILE APP EXAMPLE You need $40K to build/market a new iOS app
You have a grant for $10K so funding needed is $30K
Profit Debt 50:50 Equity
Low on chart $10K lender loses $20K* partner loses $25K you get $0K & owe $20K you get $5K
Featured appis $30K lender is even+ partner loses $15K you make $0K you make $15K
Top of Chart $200K lender is even+ partner makes $70K you make $170K you make $100K
Gran\ng agency reports your success!
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SOURCES OF FINANCING
pg 22
The turkey principle
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SOURCES OF FINANCING
• Angels (aka high net worth individuals) – Generally like to invest in areas that they have worked in or are comfortable with – Can add valuable hands-‐on experience – h9p://www.angelinvestor.ca/
• Accelerator Programs – Supported by angels and VC funds – Impact8 for social ventures
• Venture Capital Funds – Different funds invest at different stages in the growth of a company – Most funds also specialize in type of investment – h9p://www.cvca.ca/
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SOCIAL FINANCE
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SVX – SOCIAL VENTURE CONNEXION
pg 25
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SOURCES OF FINANCING
• Proof of Principle / Idea to Innova\on – www.ResearchNet.ca – www.nserc-‐crsng.gc.ca/index_eng.asp – www.cmf-‐fmc.ca/funding-‐programs – www.oce-‐ontario.org/programs – h9p://coralcea.ca/
• NRC -‐ IRAP – h9p://irap-‐pari.nrc-‐cnrc.gc.ca/main_e.html
• Founda\ons: – Ontario Trillium Founda\on -‐ www.trilliumfounda\on.org – JW McConnell Family Founda\on -‐ h9p://www.mcconnellfounda\on.ca/en – Gates Founda\on – www.gatesfounda\on.org – Imagine Canada -‐ h9p://www.imaginecanada.ca/node/22
pg 26
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HOW TO CONTACT US: Allyson Hewi9, [email protected] Twi9er: @AllysonHewi9 Kerri Golden, [email protected] Twi9er: @KerriGolden
THANK YOU!
B E C A U S E T H E F U T U R E M A T T E R S
September 2014
INNOVAT ION