This class starts with a broad view of what kinds of financing works for what kinds of startups. While most entrepreneurship classes focus on the more sophisticated finance related to venture capital, we want to also look at what happens in the vast majority of the real world startups. Including:

• Most startups are self financed, which is what we also call bootstrapping. I saw a study published by Wells Fargo, in about 2005, showing that the average cost of a startup in the United States is $10,000.
• We do not want to forget the difference between owning a business entirely yourself, and dealing with partners. Essentially, if you can own it yourself, then you’re probably better off. One exception to the rule is when you want to have partners for reducing risk, bringing in know-how and experience, and peace of mind.
• Most businesses have some level of startup cost estimates related to strategy. It’s much more about strategy than it is about requirements of the type of business. For example, food service startups run the gamut between costing almost nothing for some kinds of catering, to the startup costs of a portable lunch stand, to the startup costs of a small local restaurant, to the startup costs of an ambitious restaurant in a major urban location.
• Types of financing depend on at least two factors: first, the size of investment required; second, the desireability of the investment to potential investors; and third, the preference of the startup entrepreneurs themselves.
• Venture capital is limited to a few thousand (maybe 5K, 6K, something like that) new startups every year. These are very exclusive ventures, with proven management teams, defensible business models, good markets, and good product-market fit.
• Angel investors are generally organized and knowledgeable, and they qualify as investors according to the SEC. Some research indicates more than 200,000 angel investors in the United States. They invest amounts in the hundreds of thousands, generally.
• Friends and family should be very carefully limited because there are a lot of legal restrictions. These investments might work for tens of thousands of dollars, in some cases hundreds of thousands.
• Bootstrapping is doing it yourself, without outside investors, without sharing ownership, with or without bank loans, credit card financing, or other borrowed money.

Market information isn’t enough. You also need market strategy, marketing planning, target marketing, and marketing implementation. It’s a new world.

What comes first: product strategy or marketing strategy? Product, or market?

Consider the definitions: marketing vs. sales. Marketing vs. branding.  In the reading, why doesn’t Guy Kawasaki have a chapter on marketing?

Mark Andreeson postulates the product-market match as the key to startup success. That’s in this post … how does that relate to this topic?

I’ve recommended Seth Godin in the links, and we’ve talked about him before. What is viral marketing? Why does Seth Godin bring the word “remarkable” to mind, especially in the context of marketing? What does remarkable have to do with marketing?

The readings for this class discuss marketing and branding. How are those concepts different from one another? What is the relationship?

Required:

• 3 Weeks, Chapter 10, Branding
• 3 Weeks, Chapter 12, Spread the Word
• Kawasaki, Chapter 8, the Art of Partnering
• Kawasaki, Chapter 9, The Art of Branding

Optional:

• PAYG, Chapter 3, pages 83-92.