ENT Exam 4

What did John Suh, CEO of LegalZoom, call focusing on the legal side of the business?

"the necessary evils"

Patent

A grant of exclusive property rights on inventions through the U.S. and other governments.

Which of the following business entities include stockholders as part of the legal structure?

C corporation

Intellectual property (IP)

Intangible personal property created by human intelligence, such as ideas, inventions, slogans, logos, and processes.

Selena Gomez is a powerful social media influencer. How much do companies pay her per post?

$550,000

Convertible debt

(Also known as convertible bond or a convertible note)—a short-term loan that can be turned into equity when future financing is issued.

C corporation

(Sometimes known as a "C-corp")—a separate legal and taxable entity created by the state government and owned by an unlimited number of shareholders.

S corporation

(Sometimes known as an "S-corp")—a type of corporation that is eligible for, and elects, special taxation status.

Most of us spend ______ of our time at work "selling" in one way or another.

40%

Sole proprietorship

A business owned by one person who has full exposure to its liabilities.

General partnership

A business owned by two or more people who have made a decision to comanage and share in the profits and losses.

Limited liability company (LLC)

A business structure that combines the taxation advantages of a partnership with the limited liability benefits of a corporation without being subject to the eligibility requirements of an S-corp.

Venture philanthropy funding

A combination of financial assistance such as grants with a high level of engagement by the funder.

Initial public offering (IPO)

A company's first opportunity to sell stocks on the stock market to be purchased by members of the general public.

Investor model

A crowdfunding model that gives backers an equity stake in the business in return for their funding.

Reward-based crowdfunding

A crowdfunding model that involves rewarding backers for supporting a project.

Patronage model

A crowdfunding model where backers do not expect any direct return for their donation or investment..

Lending model

A crowdfunding model where funds are offered as loans with the expectation that the money will be repaid.

Social consequence entrepreneurship

A for-profit venture whose primary market impact is social.

Equity crowdfunding

A form of crowdfunding that gives investors the opportunity to become shareholders in a company.

Copyright

A form of protection provided to the creators of original works in the areas of literature, music, drama, choreography, art, motion pictures, sound recordings, and architecture.

Enterprising nonprofits

A form of social entrepreneurship where both the venture mission and the market impact are for social purposes.

Nondisclosure agreement (NDA)

A legal contract that outlines confidential information shared by two or more parties.

Brand strategy

A long-term plan to develop a successful brand; it involves how you plan to communicate your brand messages to your target customers.

Guerrilla marketing

A low-budget strategy that focuses on personally interacting with a target group by promoting products and services through surprise or other unconventional means.

Positioning

A marketing strategy that focuses on how your customers think or talk about product and company relative to competitors.

Marketing

A method of putting the right product in the right place, at the right price, at the right time.

Sweat equity

A non-monetary investment that increases the value or ownership interest created by the investment of hard work for no compensation.

Packaging

A process that explores every single visual element of the external appearance of an offering through the eyes of your customer.

Due diligence

A rigorous process that involves evaluating an investment opportunity prior to the contract being signed.

Entrepreneurial marketing

A set of processes adopted by entrepreneurs based on new and unconventional marketing practices in order to gain traction in competitive markets.

Seed-stage financing

A stage of financing in which small or modest amounts of capital are provided to entrepreneurs to prove a concept.

Startup financing

A stage of financing in which the money is provided to entrepreneurs to enable them to implement the idea by funding product research and development.

Early-stage financing

A stage of financing that involves larger funds provided for companies that have a team in place and a product or service tested or piloted, but have little or no revenue.

Not-for-profit

A tax status granted to companies performing functions deemed by Congress to be socially desirable that exempts them from income tax and, in some cases, allows them to receive tax-deductible donations.

Unicorn

A tech startup company that has received a $1 billion valuation, as determined by private or public investment.

Angel investor

A type of investor who uses his or her own money to provide funds to young startup private businesses run by entrepreneurs who are neither friends nor family.

Venture capitalist (VC)

A type of professional investor who generally invests in early-stage and emerging companies because of perceived long-term growth potential.

Hybrid model of social entrepreneurship

An organization with a purpose that equally emphasizes both economic and social goals.

Trademark

Any word, name, symbol, or device used in business to identify and promote a product. Its counterpart for service industries is the service mark.

Product

Anything tangible or intangible (such as a service) offered by the company.

Debt financing

Borrowing money to start a business that is expected to be paid back with interest at a designated point in the future.

Social purpose ventures

Businesses created by social entrepreneurs to resolve a social problem and make a profit.

Ryan Delk

CEO and co founder of Primer; an educational program that focuses on home-schooled students. Its a subscription based revenue model at $49.99 a mo. Amount of home-schooled kids skyrocketed bc of COVID. Raised $4M from founders fund. Did an internship on Wall St and didn't like it. Worked for square at UF going door to door. He was home-schooled and so is his child and realized there are no softwares. Worked with a coach for 4 years. Had to put in a lot of work himself. Spent $500 on advertising for pay acquisition. "You must attack a large market". Wants to focus on long term home-schooled kids. Had an inside round which helped raise another $2M. Do not give board seats away because its difficult to get someone off the board. Doesn't believe in remote work. Went to Nairobi and met with a lot of CEOs including Yahoo CEO Marissa Mayer who mentioned credit card swiper in headphone jack on cell phone. Prefers environments where people are blunt and honest. Unrelated: It costs $180k to live in San Francisco with a family but rent is dropping because of COVID.

Matthew Vega-Sanz

Cofounder of Lula; peer-to-peer car sharing platform where college students can rent out cars from their peers and others registered on the platform. Came up with the idea when he couldn't get a pizza delivered and saw a bunch of cars in a parking lot. They entered the BETA challenge (Babson Entrepreneurial Thought and Action). Made it to semi-finals and did not win but received a lot of feedback. That summer they raised some seed money, started developing the app, and ultimately launched a pilot in early 2018. They launched the app in September 2018. Within the first 2 weeks of the launch, they were listed in the top 100 apps in the iOS App Store and even getting ahead of Zipcar in the ranking. Lula won the SoFi Entrepreneur Pitch Competition at Babson and went to California to be part of the program. They're greatest challenge was insurance. They were rejected by a lot of insurance companies because of young drivers. Sent out emails to insurance companies and said that they could make profit if they invest. Within 2 weeks, they got positive responses from insurance companies and three firm offers. Lula is now partnering with the same insurance company that works with Lyft and Airbnb. Another issue was "Getaround" had filed for a patent on the peer-to-peer car-sharing model. Fortunately, it did not pass because it was too general. Matthew's advice to aspiring entrepreneurs is that "When you're starting a company, listen to who your customer is going to be".

Trade secret

Confidential information that provides companies with a competitive edge and is not in the public domain, such as formulas, patterns, compilations, programs, devices, methods, techniques, or processes.

Seyi Fabde

Cornerstone Barricades; Temp traffic control service provider that works to keep everyone safe. Was laid off in 2008 recession and went international. Florida is young state, so lots of work opportunities. Two big companies: Bob's barrels and Acme barricades. Barriers to entry: lots of capital needed, uses JIT to help cash flow, and certifications. Customers are municipalities; they advertise to contractors because thats how they get paid. They target the estimator and relationships are huge. They mark their equipment so that they know that its theirs. She kept her cash and leased equipment at first and kept them in her garage. During COVID, road construction was deemed essential so they remained open. Big compliance is insurance. Her father started the company so its a family business. She says "cash runs your business and finances make your business." She also says that its important to have grit.

Corporate social responsibility (CSR)

Describes the efforts taken by corporations to address the company's effects on environmental and social well-being in order to promote positive change.

T/F: A founders' agreement shields founders from disagreements in the future.

False

T/F: A partnership like a C corporation pays taxes at the entity level.

False

T/F: A venture capitalist invests his or her own money into startups.

False

T/F: Companies like Google protect entrepreneurs and businesses from online pirates.

False

T/F: Social entrepreneurs, unlike business entrepreneurs, have no desire to make a profit from their business ventures.

False

T/F: The for-profit business 4Ocean is idealistic but has been unsuccessful.

False

T/F: Venture capital deals started with the formation of American Research and Development (ARD) by father of venture capital, George F. Doriot.

False

Daymond John

Founder of FUBU; an American hip hop apparel company. FUBU stands for "For us, by us". Tested out the market by wearing them around town and spent $40 on hats, sold out and made $800. He closed 3 times due to lack of cash until a friend invested and had a new marketing strategy. The "bigger black guys" who had to wear 4-6XL had a hard time finding clothes so they sold to bouncers and bodyguards an it worked. Hip-hop artists went to those clubs and noticed the shirts. Music video director Ralph McDaniels noticed his bodyguards wearing it and set up a meeting. It was successful and Ralph became a mentor. They were $50k in debt and went to the MAGIC fashion trade show in Las Vegas. They didn't have enough money for a booth so they convinced big brands like Timberland to go to a hotel near by and see their booth there. They ended up writing $300k in orders. He got a $100k loan from his mom and set up a factory in his home but ran out of money again. Norman Weisfeld, the president of Samsung's textiles division made an offer. Daymond took it and made $30M in revenue in 3 months and today has sales in the billions.

Rich Palmer

Founder of Gravyty: uses artificial intelligence (AI) to help make the process of fundraising a lot more effective. Worked on Wall Street and didn't like it so decided to come up with OvenAlly which was an online platform for homemade foods. Pitched it to big people such as Paul Buchheit, Paul Graham, and Sarah Livingstone but they ended up not funding. The company failed and his father passed away so the company closed. An old friend from Capital IQ offered him a role in a company called Relationship Science, a NYC company dedicated to figuring out the route for one person to connect with someone they wanted to connect with. He still felt like thats not what he wanted. He then had a brain aneurysm and he decided to reset. He took the GMAT to pursue an MBA at Babson College in order to start a company with meaning. Reflected on Y combinator and focused on X and came up with Gravyty. hey pitched the idea to a few hospitals, colleges, and other nonprofit organizations. The initial response was good so they dove deeper into the idea to start Gravyty. Pitched Gravyty during a competition at South by Southwest (SXSW) and placed 2nd. Gravyty was then accepted into Mass Challenge, a startup accelerator. Rich's number one rule when looking for investment is to do your due diligence on the audience. Today Gravyty works with some of the largest hospitals and schools in the United States (including Babson), and nonprofits such as the Cure Alzheimer's Fund, AARP, WGBH, Yale, City of Hope, and more.

Ally Feiler

Founder of Green Tree medicinals, a marijuana company. Moved to Colorado for law school and then got into the cannabis industry. Were not called dispensaries but "Care centers". After months, Colorado required them to grow 70% of their plants. They got invested through the IRS. They have been vertically integrated for about 10 years. Pivoted towards the brand side(Green treats/ Green tree). Have 7 different effects that can be put into product. Must need a license to sell and state mandate calls for 100mg of thc for recreational and 1000mg of thc for medical which is ALOT. They use about 90% of their plants. This is a highly regulated industry that is rapidly growing in all states but is difficult to enter because of high barriers to entry, and its a very capital intensive business. Works with companies who work with banks because they pay employees through debit and credit/ no cash(has about 100 employees). In 2-3 years she hopes it will become a corporation. Involved in the Colorado Marijuana Political scene. Has lawsuits in Florida and worries about big pharma and big tobacco. Thinks it will be recreational within the next 4 years.

Trevor Abbott

Founder of SpinChill. He's a serial ent. Came up with the idea while drinking warm beer and wanting to find a way to chill it. Created a minimal value prototype to show the world but it had to be perfect. 3D printed their products and sold them in Gville. Initially targeted college students but also targeted construction workers. Costed $2.50 and sold them for $5-$10. Found little hacks to lower costs and then started crowdfunding. Their kickstarter blew up and raised $45k. He says you must have grit. Used influencers for advertisement, and funding. Eventually sold to retailers. They made a lot of revenue this year. Was on West Texas Investors. Were pigeon-holed by their name. Says that marketing is everything in consumer products and that he learned that from the company "Chubbies". Ended up offloading SpinChill.

What is an issue that comes up when multiple people are working on an innovation?

IP innovation

How did Domino's Pizza's chief digital officer explain the company's decision to go with a transparent marketing strategy?

In an era when most everyone photographs their food, it makes sense to be honest about what Domino's food really looks like.

New business owners

Individuals who are former nascent entrepreneurs and have been actively involved in a business for more than 3 months but less than 3.5 years.

Necessity-based entrepreneurs

Individuals who are pushed into starting a business because of circumstance such as redundancy, threat of job loss, and unemployment.

Potential entrepreneurs

Individuals who believe they have the capacity and know-how to start a business without being burdened by the fear of failure.

Nascent entrepreneurs

Individuals who have set up a business they will own or co-own that is less than 3 months old and has not yet generated wages or salaries for the owners.

Opportunity-based entrepreneurs

Individuals who make a decision to start their own businesses based on their ability to create or exploit an opportunity, and whose main driver for getting involved in the venture is being independent or increasing their income, rather than merely maintaining their income.

Accredited investors

Investors who earn an annual income of more than $200,000 or have a net worth of more than $1 million.

How is the for-profit business 4Ocean funded?

It sells bracelets that are made of recycled materials.

Keegan interacts with his customers whenever and wherever he can. He really wants to know what they like about his product, what they hate about his product, which of them would recommend his product, and the extent of how they connect emotionally to his product. He even researches to find out what his customers feel about his competitors. Keegan is striving to accomplish what aspect of building his brand?

Know your customer

Wicked problems

Large, complex social problems where there is no clear solution; where there is limited, confusing, or contradictory information available; and where a whole range of people with conflicting values engage in debate.

In most countries, what is the proportion of women in the early stage of entrepreneurship as compared to men?

Most have a similar proportion of men and women.

True fans

People who will buy anything you produce; they will wait in line for your products, drive for hours to attend one of your events, and preorder your next product without even knowing what it looks like.

Why is it necessary to protect intellectual property (IP)?

The IP may be the most valuable property of the company.

Promotion

The activities that involve all the ways in which companies tell their customers about their offering.

Price

The amount that the customer is expected to pay for the product.

Marketing mix

The combination of product, price, promotion, and placement of what a company is offereing.

Vesting

The concept of imposing equity forfeitures on cofounders over a certain period of time on a piecemeal basis should they not stay with the company.

Place

The location where the product is actually distributed to your target market; for example, trade fairs, retail stores, catalogs, mail order, online, and so forth.

Stakeholders

The people or groups affected by or involved with the achievements of the social enterprise's objectives.

Established business owners

The people who have been active in business for more than 3.5 years.

Total Entrepreneurial Activity (TEA)

The percentage of the population of each country between the ages of 18 and 64, who are either a nascent entrepreneur or owner—manager of a new business.

Bootstrapping

The process of building or starting a business with no outside investment, funding, or support.

Branding

The process of creating a name, term, design, symbol, or any other feature that identifies a product or service and differentiates it from others.

Crowdfunding

The process of raising funding for a new venture from a large audience (the "crowd"), typically through the Internet.

Crowdsourcing

The process of using the Internet to attract, aggregate, and manage ostensibly inexpensive or even free labor from enthusiastic customers and like-minded people.

Earned-income activities

The sale of products or services that are used as a source of revenue generation.

Equity financing

The sale of shares of stock in exchange for cash.

Which is true about legal services for entrepreneurs?

There are several resources for free legal services.

T/F: If an entrepreneur is asking for $150,000 in investment for 10% of the company, the post-money valuation is $1.5 million.

True

T/F: In order to protect his or her product, an entrepreneur may build a unique marker into it.

True

T/F: In the experiment with college students to compare first impressions of professors with assessments built over months, the indications are that a ten-second first impression is almost as powerful as those based upon months of interaction.

True

T/F: Marketing today is less expensive but more challenging.

True

T/F: One benefit of having a corporate social responsibility strategy (CSR) is that an organization may receive more lenient penalties in legal matters than a company without such a strategy.

True

T/F: Facial expressions rank highest, followed by voice tone, and finally words.

True. Facial 55%, Voice tone 35%, and 7% words

Founders' agreement

a clear agreement between founders on a number of key issues that their business might face.

Unlike traditional marketing, entrepreneurial marketing focuses on ______.

an interactive approach

According to Angel Capital Association, the least desirable time to seek angel investment is ______.

before the company is growing rapidly

When marketing yourself, it is important to remember that a first impression is created in ______.

between 7 and 20 seconds

The financing funds provided to cover expenses associated with the initial public offering are ______.

bridge

Traditional entrepreneurs' goal is to make a profit whereas social entrepreneurs' goal is to ______.

bring about social change

How does entrepreneur, Mike Moyer, suggest to split up the startup among founders?

by contribution of time, money, and other resources

Before making a loan to a startup, banks look at ______.

capital assets that exist

SJF Ventures operates as a traditional VC fund. However, it also allocates a percentage to be invested in companies that make a positive social or environmental impact. What type of fund is SJF Ventures?

community fund

According to the Mitchell stakeholder typology, who are the stakeholders who possess all the attributes?

definitive stakeholders

A set of processes adopted by entrepreneurs based on new and unconventional marketing practices to gain attention in competitive markets is called ______.

entrepreneurial marketing

Once a company starts growing and showing potential, entrepreneurs look for ______ financing.

equity

What is the sale of shares of stock in exchange for cash?

equity financing

Stenny's food truck business has been operating for four years. According to the GEM study, what phase of entrepreneurship is he in?

established business owner

Why do angel investors not carry out as much due diligence as VCs?

general lack of information

The general rule of thumb when considering financing is to ______.

hold off on investment as long as possible

By taking the companies public, venture capitalists exited Uber and Lyft through what exit strategy?

initial public offering in order to exit from the VC funding options.

When it comes to creating content that drives sales, the goal is all about ______.

inspiring, educating, and entertaining

What is an advantage of convertible debt?

it removes the need for valuation

First introduced by journalist Chris Anderson, the ______ theory holds that the focus is shifting from mainstream products and services offered by big brands (think Levis) toward a wide variety of smaller niche markets.

long tail

Manuel lives in a remote village in Belize and creates small art pieces using traditional methods. He has organized similar artisans in a few other villages into a collective and wants to seek financing to expand. What funding source makes the most sense for Manuel?

micro financing

What angel investors want to be involved in ventures?

micromanagement

What is a grant of exclusive property rights on inventions through the U.S. and other governments?

patent

Choosing the wrong entity may expose the owners to ______.

personal liabilities

Kingston sells his handmade souvenir throw pillows at an airport kiosk as well as in local hotels in Chicago. He also offers custom versions online through his website. For Kingston, the kiosk, hotels, and his website are the ______ (one of the four Ps).

place

How do investors calculate pre-money valuation?

post-money valuation less investment

If an organization with a corporate social responsibility (CSR) strategy is faced with heavy losses, it will______.

prioritize profit

Angel investors receive lots of unsolicited ideas every day, so it is a good idea to have a ______ vouch for the entrepreneur.

professional

Midori owns a small t-shirt printing company. She advertises online, has an active social media presence, and sends out direct-mail fliers to local sports teams. She also sponsors a softball league team which gains her coverage in the local newspaper. Her advertising, social media, direct mail, and local newspaper coverage comprise Midori's ______.

promotion

What is the stage of financing in which small or modest amounts of capital are provided to entrepreneurs to prove a concept?

seed-stage

The venture capital industry received a boost when the Small Business Investment Act of 1958 allowed ______.

small business investment companies were allowed to invest in startups

When an entrepreneur starts a business to both resolve a social problem and make a profit, they are embarking on a ______.

social purpose venture

What is the stage of financing in which the money is provided to entrepreneurs to enable them to implement the idea by funding product research and development?

startup

When a company is classified as a not-for-profit, this means that it is ______.

tax exempt

People

the people who are responsible for every aspect of sales and marketing.

The Bail Project is an Audacious Project awardee. What is its audacious goal?

to combat racial disparity

T/F: Unlike angel investors, venture capitalists are mostly professional money managers.

true

Dangerous stakeholders possess which of the following?

urgency

Which of the following is a type of enterprising nonprofit?

venture philanthropy funding

Workers' compensation is meant to assist employees with ______.

work related injuries