Posted: February 7th, 2010 | Author: Chim | Filed under: Education, Food for thoughts, Fun, Startups | Tags: Business, Business plan, Education, Entrepreneurs, Fun, Interesting, Internet, Money, Social Network, Startups | No Comments »
Kwedit is a strange name for a payment company. This is a startup that offers a new form of payment to social and interactive games that allows people to buy virtual goods. The strange thing is that it allows people to “promise” to pay for a virtual good and the user can pay the promise later with a bar code in a 7eleven store.
Even though this seems to be a great innovation, the idea of printing a bar code and pay it in a retail store is nothing new to date. The strong differentiator of Kwedit is the idea of promising to pay later. I wonder what would happen if everybody promises to pay but none of the actually pays anything. I believe that the CFO of the company would be scare of the increase in the account payable of the balance sheet.
This type of payment for virtual goods reminded me of Habbo Hotel. Habbo is a Finnish company that started its virtual goods operations before the internet boom. It is probably the first company to have a business model based on selling virtual goodies to users. Interesting enough, Habbo targeted in a very narrow market segment. Its targets on teenagers that love to chat in pixel-lated environment.
Habbo and its many forms of payments.
Habbo offers 7eleven payments too. OK, they sell pre-paid cards and Kwedit doesn’t.
In my humble opinion, Sulake could have grown much more if it had focused on the virtual good market as a whole market instead of just that niche teenager segment. It could have created a strategic plan of reaching all types of games and services based on virtual goods. Well, other companies grew upon this model and they are newer than Habbo. C’est tant pis.
Posted: December 22nd, 2009 | Author: Chim | Filed under: Education, Entrepreneurship, Food for thoughts, Startups, Venture Capital, Web 2.0 | Tags: Business plan, Canada, Entrepreneurs, Entrepreneurship, Food for thoughts, Internet, Venture Capital | No Comments »
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Aeryon
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CognoVision
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Avatar Builder
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Dayforce
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D-Wave
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Zoompass
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GanSystems
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GlassBox TV
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Social Software Solutions
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Metranome
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Morega
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NimTech
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Overlay.TV
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Peerset
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Post Rank
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REMCO Solid State Lighting
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Rypple
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Sixtron
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Skymeter
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You I Labs
Posted: September 2nd, 2009 | Author: Chim | Filed under: Education, Food for thoughts, Startups, Venture Capital | Tags: Articles, Business plan, Entrepreneurs, Entrepreneurship, Interesting, Venture Capital | No Comments »
TiE Young Entrepreneurs
I love this competition. It is one of the firsts business competition towards students from 9-12. This business plan is hosted by Carolinas – The Global Network of Entrepreneurs and the award for the winning team is USD 10K.
It is important to foster this type of competitions to children and teens. They will be able to learn and train their guts about the process of creating a new business.
For more information check it here.
Posted: June 22nd, 2009 | Author: Chim | Filed under: Education, Finance, Private Equity, Venture Capital | Tags: Business plan, Case study, Education, Entrepreneurs, Entrepreneurship, Finance, Free, Interesting, Math, Private Equity, Startups, Valuation, Venture Capital | 1 Comment »
Invest Now! - from Flickr
My last post from the Entrepreneurial Finance course is here.
Today, I want to share my summary of the Horizon Communications Corporation (A) case study.
This document basically shows the industry background of telecommunication in the 90’s. Basically, it highlights the Telecommunications Act of 1996 and how it changed the market.
With the Act, there was a new market opportunity for companies to provide transmission facility to customers. Basically, there was an opportunity for new companies to serve as a hub connecting a telecommunication facility for big clients to other local telecom providers and to long distance providers.
Along the case, it explains the who the founders are, what the Horizon’s operating strategy is and what the product and service are.
The case presents a serious of challenging questions to the Horizon’s management. It wants to students to think what amount of financing should they ask for and which venture capital firms they should approach.
Again, this case presents challenging questions for VCs and entrepreneurs.
Assignment from MIT OpenCourseWare:
Horizon Communications
1.Would you have started this company? Would you invest in this company? Why or why not? What do you think of the economics of the idea? Of the management team? How does this investment differ from that in Technical Data Corp.
2.What pre-money value would you place on the company? I.e., what value should the Horizon team place on the company when they try to raise money? How much money should they attempt to raise?
3.How should Horizon approach their fundraising process? Should Horizon go to a venture capital firm or to family and friends? If Horizon decides to go to a venture capital firm, which firm or firms should they target?
4.Can a venture capitalist add value to the Horizon team? How?
Assume:
. Horizon’s marginal tax rate is 36%
. Expected inflation is 3%.
Read the Case Study: Horizon Communications Corporation (A)
Horizon Communications
1.
Would you have started this company? Would you invest in this company? Why or why not? What do you think of the economics of the idea? Of the management team? How does this investment differ from that in Technical Data Corp.
2.
What pre-money value would you place on the company? I.e., what value should the Horizon team place on the company when they try to raise money? How much money should they attempt to raise?
3.
How should Horizon approach their fundraising process? Should Horizon go to a venture capital firm or to family and friends? If Horizon decides to go to a venture capital firm, which firm or firms should they target?
4.
Can a venture capitalist add value to the Horizon team? How?
Assume:
. Horizon’s marginal tax rate is 36%
. Expected inflation is 3%.
Please, add your answers in the comment section below!
Posted: June 21st, 2009 | Author: Chim | Filed under: Education, Finance, Private Equity, Venture Capital | Tags: Business plan, Case study, Education, Entrepreneurs, Entrepreneurship, Finance, Free, Interesting, Math, Private Equity, Startups, Valuation, Venture Capital | 1 Comment »
Invest - from Flickr
I’ve started studying the Entrepreneurial Finance at MIT OpenCourseWare by myself a month ago. I wrote my first post about the first case study here (Technical Data Corporation Business Plan).
Until now, I think the selection of the case studies are awesome. It presents many cases where the student is put in the position of a venture capitalist and an entrepreneur. For instance, you have to learn how to valuate a business and decide if you want to invest in a specific company. Plus, you must provide your analysis to decide what you want to do next.
Today, I’m want to present my summary and my recommendations about the Centex Telemanagement, Inc. case study.
Centex Telemanagement, Inc.
- The case starts with the story of Sierra Ventures and its found Peter Wendell. Then, it talks about how Wendell met with Jeffrey Drazan. Drazan was a VC associate hired by Wendell. In this part of the case, it gave me a very interesting vision of how VC hires an associate to work with. Wendell wanted to invest in the telecommunication industry after the break-up of AT&T’s monopoly and he wanted to find a person with experience in telecommunication industry. Luckly, Drazan, who was in that industry, wanted to go to the VC industry. They had the chance to meet each other and the relationship developed.
- Later, it shows quickly the Centex Telemanagement formation, but the focus is how Drazan found and brought this opportunity to Wendell. Drazan worked with the Centex Telemanagement by acting as the CFO of the company. However, Centex and Sierra hadn’t formed any formal and legal relationship yet. Drazan was supporting the financial projections and planning the growth of the company. Everyone was expecting the Sierra would make an investment to Centex. When they were almost closing the details of the investment, the Sierra founders decided not to continue to the plan. Drazan was shocked because he dedicated an amount of effort to the company and it would ruined all his efforts. However, after some negotiation, they closed the deal in a staged/milestone-oriented approach to the deal.
- To get higher valuation, Centex would need to achieve some milestone, such as hiring the CEO and some other people in the senior management and also Centex would need to achieve an X amount of revenue by a deadline.
Assignment from MIT OpenCourseWare:
Centex Questions:
1. Sierra Ventures and Centex:
-Describe the deal structure:
-What role does Series C Preferred play?
-What value does right of first offer have?
-What valuation is Sierra offering to Centex? How can Sierra justify this valuation?
2. Private (initial) investors:
-How much dilution do the initial investors experience?
-How much dilution would the initial investors have experienced, if they had anti-dilution protection on their initial investment of $499,999? (Full ratchet? Weighted ratchet?)
Assume that by May 1985 the private placement offering has raised the full $499,999 for Centex at $2.25 per share
Centex Questions:
1. Sierra Ventures and Centex:
-Describe the deal structure:
-What role does Series C Preferred play?
-What value does right of first offer have?
-What valuation is Sierra offering to Centex? How can Sierra justify this valuation?
2. Private (initial) investors:
-How much dilution do the initial investors experience?
-How much dilution would the initial investors have experienced, if they had anti-dilution protection on their initial investment of $499,999? (Full ratchet? Weighted ratchet?)
Assume that by May 1985 the private placement offering has raised the full $499,999 for Centex at $2.25 per share
Read the Case Study: Centex Telemanagement, Inc. – 286059p2
Please, add your answers in the comment section!
