Entrepreneurship exam 2
Corporations and Non-profits
________ require a board of directors
Online lending
a method of receiving loans through a non-traditional lender (not a bank or credit union). An online lending loan frequently does not require collateral
Design Patent
a patent that offers protection for the way a product looks
Trademark
A type of intellectual property consisting of a recognizable sign, design, or expression that identifies products or services from a particular source and distinguishes them from others. The trademark owner can be an individual, business organization, or any legal entity.
Trade Secrets
A type of intellectual property includes formulas, practices, processes, designs, instruments, or patterns which the owner takes reasonable measures to keep secret
Patent
A type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention.
Community development funds (CDFIs)
loans that are provided to help start local businesses with the intention of creating local jobs
Primary ways to fund a startup
- Bootstrapping - Friends and Family - Banks and Credit Unions - Community Development Funds - Crowdfunding - Online Lending - Angel Investors - Grants - Pitch Competitions - Strategic Partnerships
Types of Intellectual Property
copyrights, trademarks, patents, trade secrets
Strategic Partnership
investments that are made by organizations (typically companies) in exchange for equity in a startup that adds strategic value to the investing company
B-Lab Global
To become a B-Corp the organization needs to be certified by ______
Friends and Family
When bootstrap startups don't have enough funds, they typically ask friends and family for money.
pitch competition
events where entrepreneurs compete for prizes. The prizes are typically either money for funding of the startup or services that can assist the startup like web hosting services.
Lending Crowdfunding
Raising funds in the form of loans with a set interest rate and time frame Ex: Kiva, LendingClub
B Corporation
Similar to a C-corp, it separates legal liability from the owner(s) and profits and losses flow through the company. However, the organization is also certified that it is focused on social and environmental good, provides public transparency and balances profit and purpose.
Banks and Credit Unions
Tend to be risk averse. However, many local banks that are focused on community development will funds startups.
reward crowdfunding
When individuals contribute a certain amount of money to a given project or various projects in return for an expected kind of reward ex: Kickstarter, Indiegogo
donation crowdfunding
When there's no return on investment - typically only for charities or social causes ex: Classmunity, Gofundme
Equity Crowdfunding
a form of crowdfunding that gives investors the opportunity to become shareholders in a company ex: Fundable, AngelList
Copyright
a type of intellectual property that gives the owner the exclusive right to copy and distribute a creative work, usually for a limited time. The creative work may be literary, artistic, educational, or musical form.
non-profit organization
an entity that is organized for the purpose of providing social or public benefit. Any "profit" after operations is put back into the organization. All liability resides on the Non-Profit (there are no owners). Require a board of directors
Limited Liability Company (LLC)
A legal entity type limits legal liability. Profits and losses flow through the owner(s) tax returns.
C Corporation
A legal entity which separates legal liability from the owner(s). Profits and losses flow through the company. A board of directors is required.
Crowdfunding
A method of raising money through the internet to help a business, project or special cause.
Grants
Money that can be provided to startups without giving up any equity or functioning as a loan. Grants are typically provided by institutions seeking to accomplish a mission aligned with the startup's mission.
Business Legal Entity Types
Non-Profit, proprietership/ partnership, llc, c-corp, benefit-corp
S-corp
Not a legal entity but a tax designation. S-corps provide legal entity protection but profits flow through shareholder tax returns. Also require a board of directors.
Legal considerations for the startup
Business legal entity type, intellectual property, contracts, licensing
Angel investors
Individuals or groups of investors that provide funding directly to startups in exchange for equity
proprietorship/ partnership
unincorporated business owned and run by an individual(s). Virtually no legal protection. Profits and losses flow through owners tax return
Utility Patent
unlike a design patent, a utility patent protects a process, not the physical way something is designed.
Bootstrapping
using low-cost or free techniques to minimize your cost of doing business. Use own funds