Thanks to the following reviewers who participated throughout all stages of the book's development:
Frank W. Anderson, University of Texas at Dallas
Craig E. Armstrong, University of Alabama
David M. Ford, University of Alabama
Steven Frankforter, Winthrop University
Mary H. Harris, Cabrini College
Ronald Meyers, University of Cincinnati
Talitha Smith, Auburn University
David Springate, University of Texas at Dallas
Mengsteab Tesfayohannes, Susquehanna University
Xuan Tian, Indiana University
About the Authors
Gary Gibbonshas extensive professional experience in portfolio management, securities valuation, financial modeling, and financial planning and evaluation of entrepreneurial firms. His corporate and investment clients include the Bank of Bermuda, the Agyros Foundation, Imperial Mortgage, Kaiser Steel Resources, the New Kaiser VEBA, the Kaiser Steel Benefit Trust, and many other institutions and small firms. Additionally, he has served as an expert witness or expert consultant in numerous legal proceedings; he has provided opinions that have been used in support of specific civil, tax, or regulatory positions. He has worked on both civil and criminal litigation and in court, arbitration, or mediation proceedings. Dr. Gibbons has served on the board of directors of both public and private companies. When serving on these various boards, he has generally acted in the capacity of the chief financial officer or the chair of the finance committee. Dr. Gibbons earned his PhD in business administration—with emphasis in strategy and finance—at Claremont Graduate School, Peter F. Drucker Graduate School of Management. He is the Academic Director of the Thunderbird Private Equity Center at Thunderbird School of Global Management.Robert D. Hisrichis the Garvin Professor of Global Entrepreneurship and Director of the Center for Global Entrepreneurship at Thunderbird School of Global Management. He is also president of H&B Associates, a marketing and management consulting firm he founded. Dr. Hisrich received his MBA and PhD degrees from the University of Cincinnati and honorary doctorate degrees from Chuvash State University (Russia) and the University of Miskolc (Hungary). He has authored and coauthored 34 books, including Marketing for Entrepreneurs and SMEs: A Global Perspective (with Maja Konečnik Ruzzier and Mitja Ruzzier, 2014); Managing Innovation and Entrepreneurship (with Claudine Kearney, 2014); Governpreneurship: Establishing a Thriving Entrepreneurial Spirit in Government (with Amr Al-Dabbagh, 2013); Entrepreneurship: Starting, Developing, and Managing a New Enterprise (9th edition; with Michael P. Peters and Dean A. Shepherd, 2013); International Entrepreneurship: Starting, Developing, and Managing a Global Venture (2nd ed., 2013); Corporate Entrepreneurship: How to Create a Thriving Entrepreneurial Spirit Throughout Your Company (with Claudine Kearney, 2011); and Technology Entrepreneurship: Creating, Capturing, and Protecting Value (with Thomas N. Duening and Michael A. Lechter, 2010). He has written more than 325 articles on entrepreneurship, international business management, and venture capital. He has instituted academic and training programs in Hungary, Russia, and China.Carlos M. DaSilvahas widespread experience in entrepreneurship and the startup ecosystem. He is the Director of the Founder Institute, Portugal, the world's largest early stage startup accelerator, with over 1,000 graduate companies across six continents. Dr. DaSilva is responsible for the mentoring of dozens of technology entrepreneurs every year. He is frequently invited to lecture on topics related to entrepreneurship, as well as participate in the jury of various startup competitions. Dr. DaSilva held the positions of visiting scholar at the Thunderbird School of Global Management and at the University of Southern California in Los Angeles. He is a professor of entrepreneurship at the School of Business Administration in Fribourg, Switzerland, and lectures on topics related to entrepreneurial finance and business model innovation. Prior to obtaining his PhD in technology management at the University of Ljubljana, he worked for several years as a strategy manager at an Eastern European startup venture that was recently acquired by a large multinational group.
Chapter 1 The Entrepreneurial Challenge: A Global Perspective
Learning Objectives
To understand the importance of entrepreneurial finance
To introduce the different types of entrepreneurs
To expose the challenges associated with being an entrepreneur
To identify the traits of global entrepreneurs
To understand what is different about entrepreneurial finance
Case: CEON Solutions Pvt. Ltd.
Abhay Panjiyar, a young engineer in his second year of engineering school, had an idea while he was creating an effective administration process for Bhopal, an India-based education nongovernmental organization (NGO). Along with three friends who “believed in creating everything out of nothing” (hence the name CEON), Abhay developed an analytical problem-solving software for use in India's schools. He started participating in business plan competitions with his revolutionary idea of educational process management (EPM) software and received an invitation from IIM Ahmedabad's Centre for Innovation Incubation and Entrepreneurship (CIIE) to be their first incubator company.
Improving the quality of education is an important issue in India and other emerging countries. Abhay saw the major obstacle being the nonsharing of information among teachers, students, and parents. He filled this gap by developing software that connects all parties and helps parents become involved effectively in their students’ success.
Education is a knowledge-driven sector, and it is a growing market with schools competing to improve education. In that competition, CEON's software enables better education process management for schools.
Abhay began his startup by borrowing money from his family. He ran his business at the lowest possible cost. He paid salaries out of borrowed money and got Rs. 1 lakh (USD $2,000) from his very first client. With the help of this funding, Abhay was able to double his client base and convinced GVFL, a venture capital firm, to invest additional money up to Rs. 3 crores (USD $600,000).
Today, with this software, parents are able to see whether their children have missed classes, how many questions they asked in class, whether they are showing more interest in sports than classes, and if there is a parent-teacher meeting at school. It allows personalized tools for assessment of a student with instant feedback to parents about their child's performance in school.
CEON Solutions now has two more products available—an NGO resource planning solution and police inventory management software—and is looking to expand its client base.
Abhay thinks that of the 1.2 million schools in India, at least 10% would benefit from his software. Even though CEON is creating this new market, its growth is difficult to predict. CEON's approach to use minimum resources, dedicated manpower, a research-oriented business structure, and direct marketing to quality schools is a key factor for its success.
The entrepreneurial landscape is rapidly changing. Fast-growing companies take longer to go public, secondary venture capital markets are flourishing, and new financing options such as crowdfunding are emerging. We are facing a new era in capital strategy. Private money has never been so abundant and is creating opportunity for innovation and faster company growth. In short, entrepreneurs and investors are