What is Entrepreneurship?

The word “entrepreneur” is derived from the French verb entreprendre, which means
‘to undertake’. This refers to those who “undertake” the risk of new enterprises.
Enterprise is created by an entrepreneur. The process of creation is called
“entrepreneurship”.
Entrepreneurship is the ability and readiness to develop, organize and run a
business enterprise, along with any of its uncertainties in order to make a profit. The
most prominent example of entrepreneurship is the starting of new businesses.

Types of Entrepreneurship:

Small Business Entrepreneurship-

These businesses are a hairdresser, grocery store, travel agent, consultant,
carpenter, plumber, electrician, etc. These people run or own their own business and
hire family members or local employees. For them, the profit would be able to feed
their family and not make 100 million business or take over an industry. They fund
their business by taking small business loans or loans from friends and family.

Scalable Startup Entrepreneurship-

This start-up entrepreneur starts a business knowing that their vision can change the
world. They attract investors who think and encourage people who think out of the
box. The research focuses on scalable business and experimental models, so, they
hire the best and the brightest employees. They require more venture capital to fuel
and back their project or business.

Large Company Entrepreneurship-

These huge companies have defined life-cycles. Most of these companies grow and
sustain by offering new and innovative products that revolve around their main
products. The change in technology, customer preferences, new competition, etc.,
build pressure for large companies to create an innovative product and sell it to the
new set of customers in the new market. To cope with the rapid technological
changes, the existing organisations either buy innovation enterprises or attempt to
construct the product internally.

Social Entrepreneurship-
This type of entrepreneurship focuses on producing products and services that
resolve social needs and problems. Their only motto and goal is to work for society
and not make any profits.
Idea Generation and Validation:
 Business Model Canvas

The Business Model Canvas is a business tool used to visualize all the building
blocks of starting a business, including customers, a route to market, value
proposition, and finance. It consists of a total of nine segments.

Why the Business Model Canvas:

It structures the discussions and it’s faster than other traditional methods

It’s great for developing a portfolio of ideas: Using the Business Model Canvas,
one can spend minutes or hours sketching business models for multiple ideas. He
still has to do more research and might end up writing a long business plan to secure
capital or promote the ideas, but it’s a quick way to weed out bad ideas.

It intuitively makes sense: In its simplest form, the Canvas has front and
backstages. The front stage shows what drives value and how you reach and make
money from customers. The backstage shows what is required to make the front
stage possible. It quickly clarifies thinking on the business model and that one
building block naturally leads to the next.

The value proposition: It forces you to think deeply about what your venture
delivers to the customer, which problems it helps solve, and which customer needs
are satisfied. Great ventures start with the customer and work backward. Weak
ventures start with the product, hope there is a market for it, and put customers at
the end of the product development process.

Segments of Business Model Canvas:

Key partners

1. Who are your key partners/suppliers?

2. What are the motivations for the partnerships?

Value Propositions

1. The collection of products and services your business offers to meet the
needs of your customers.
2. What core value do you deliver to the customer?
3. Which customer needs are you satisfying?

Key activities

1. The most important activities in executing your company’s value proposition.

2. What activities are important, the most in distribution channels, customer
relationships, revenue streams?
3. What key activities does your value proposition require?

Key resources

1. The resources that are necessary to create value for the customer; they
could be human, financial, physical, and intellectual.
2. What key resources does your value proposition require?
3. What resources are important, the most in distribution channels,
customer relationships, revenue streams?

Customer relationships

1. Your customer relationships are the fifth piece in your business model canvas.
2. This section is about how you get your customers, how you keep your
customers, and how you grow your customer. The channel you choose to
distribute your product will also help determine your customer relationships.
3. What relationship that the target customer expects you to establish?

Channels

1. The ways how your company delivers its value proposition to its targeted
customers.
2. Through which channels that your customers want to be reached?
3. Which channels work best? How much do they cost? How can they be
integrated into your and your customers’ routines?

Customer Segments
 1. Perhaps the most important part of your canvas is the customer
segments. If you don’t know who your business is catering to you’ll never
be able to sell to them.
2. You need to figure out who your customers are and why they would buy
from you.
3. Which classes are you creating values for?
4. Who are your most important customers?

Cost structure

1. You need to know what the most important costs are, what your most
expensive resources are, and how much your activities and partnerships cost.
Anything that is going to cost you money to keep your business operational
needs to be included here.

Revenue Stream
1. Your revenue streams are how you will make your money from your value
proposition. What value is your customer paying for and how are you going
to capture that value?
2. For what value are your customers willing to pay?
3. What and how do they recently pay? How would they prefer to pay?

Some useful resources:

https://medium.com/seed-digital/how-to-business-model-canvas-explained-ad3676b
6fe4a

https://www.productplan.com/business-model-canvas/

https://www.culturehive.co.uk/wp-content/uploads/2016/01/Introducing-the-Business-
Model-Canvas.pdf
 Stages of a Startup
Like any other growing thing, all businesses have life cycles, there are 6 specific
stages of a startup as they develop. Though the time spent in each stage will be
different for every growing company, there are six main phases. Why does it matter
what start-up stage your company is presently in? Knowing where you are in your
journey will help you manage your time and resources efficiently.

Stage 1: Concept and Research

It seems everybody has (what they consider) a million-dollar idea, but making an
idea into reality is very rare. Rarer still is the “great idea” that not only gets off the
ground, but finds its perfect audience. Do people really need your product or
service? What problem does your offering solve? Is your idea already out there,
being sold by an existing company? Research in hand, create a business plan and
mission statement.

Stage 2: Commitment

Here’s where you move from a concept to a company, putting your research into
practice. Create a prototype, develop a process, and start building a team. Secure
funding. Continue to refine your business model. Work towards a minimum viable
product, begin initial marketing to drum up some word of mouth, then launch.

Stage 3: Traction

Traction, or validation, is typically the first year of a start-up. This is the stage where
you begin to get the word out about your product and gain your first customers. Here
you find out whether or not your company is truly viable. At this stage, focus on
growing your customer base and actually attaining the product-market fit you
researched earlier.

Stage 4: Refinement

In the refinement stage, you are receiving—and soliciting—feedback from early

adopters, then using that feedback to continue refining your product or service. How
can you improve your offering? What about your customer experience? Concentrate
on expanding the aspects of your product that are most beneficial to customers.
Refinement also means refining your process, making it more efficient. How can you
streamline your process?

Stage 5: Scaling

The next stage of a startup is scaling, or growing—further growing your customer

base, your offerings, and your company itself. In this stage, you iterate on what’s
working and put processes into place to iterate faster. Continue optimizing your
marketing strategies to efficiently pull in customers and increase your conversion
rates. While scaling up, you want to channel all your focus on just one thing—growth.
Stage 6: Becoming Established

Congratulations—your company is no longer a start-up, but an established

enterprise. In this stage, you may see considerable growth, although not at the
dramatic rate you did while scaling up. Focus on increasing customer retention and
loyalty, testing and refining your marketing strategies, and further developing your
strengths.

What You Need to Know to Make the Most of Each Startup Stage

Of the 6 stages of a startup, which stage of start-up growth best describes your
business’s current incarnation? Wherever you are on the start-up timeline, keep
these tips in mind as you work toward the next.

● Be patient. Regardless of where your start-up falls in the stages of

development, it can be difficult to fully embrace that stage without wanting to
jump ahead. Resist the temptation to cut corners. Each stage needs to play
out fully…which may take years.
● Remember that every company is unique. Comparing your progress to other
start-ups’ trajectories can be productive—to a point—if you are learning from
their mistakes and triumphs. But take care that this comparison is inspiring
you, rather than dragging you down.
● Keep your customers at the center of everything you do. Your customers’
needs and experience are all-important; after all, without customers, your
company can’t survive.

Stages of Funding

Raising equity funding for your startup is a long, difficult, and often demoralizing
process. However, if you’re successful, you walk away with money that will help your
startup grow and become everything you hope it could become. One of the major
challenges that founders run across is that raising a round often takes more time
than they expected. Another challenge that arises with equity funding is that there
are more people involved in running the company. While most founders start with a
small, intimate team, each round of funding brings on new investors.

Those investors usually expect not only a financial portion of the startup, but also a
say in how things are done. In extreme cases, they may even choose to oust a
founder, as famously happened with Uber founder Travis Kalanick.

But despite these challenges, thousands of startups raise funding every year,
implying that the potential rewards outweigh the guaranteed strife and risk. Here’s an
outline of what a startup founder can expect at each stage of raising equity funding.
Pre-Seed Funding

Pre-seed funding is the earliest stage of funding, so early that many people don’t
include it in the cycle of equity funding.

At this stage, founders are working with a very small team (or even by themselves)
and are developing a prototype or proof-of-concept. The money to fund a pre-seed
stage typically comes from the founders themselves, their families, friends and
family, and maybe an angel investor or an incubator.

Pre-seed funding is a relatively new part of the startup lifecycle, so it’s difficult to say
how much money a founder can expect to raise during the pre-seed period.

Seed Funding

What is seed funding?

The very first money that many enterprises raise — whether they go on to raise a
Series A or not — is seed funding.

The name is pretty self explanatory: This is the seed that will (hopefully) grow the
company. Seed funding is used to take a startup from idea to the first steps, such as
product development or market research.

Seed funding may be raised from family and friends, angel investors, incubators, and
venture capital firms that focus on early-stage startups. Angel investors are perhaps
the most common type of investor at this stage.

This is also the end point for many startups. If they can’t gain traction before the
money runs out (also known as running out of runway), then they’ll fold.

On the other hand, some startups decide that they’re not interested in raising more
money — that the level they reach with seed money is good enough or that they’re
able to grow more without more investment — and choose to stop raising funding
rounds at this point.

Series A FUNDING

What is Series A funding round?

Once a startup makes it through the seed stage and they have some kind of traction
— whether it’s number of users, revenue, views, or whatever other key performance
indicator (KPI) they’ve set themselves — and they’re ready to raise a Series A round
to help lift them to the next level.

In a Series A round, startups are expected to have a plan for developing a business
model, even if they haven’t proven it yet. They’re also expected to use the money
raised to increase revenue.
How much money is involved in a Series A funding round?

Because the investment is higher than the seed round, investors are going to want
more substance than they require for the seed funding, before they commit.

It’s no longer acceptable to have a great idea — the founder has to be able to prove
that the great idea will make a great company.

Series A rounds (and all subsequent rounds) are usually led by one investor, who
anchors the round. Getting that first investor is essential, as founders will often find
that other investors fall into line once the first one has committed.

However, losing that first investor before the round is closed can also be devastating,
as other investors may also drop out.

Series A funding usually comes from venture capital firms, although angel investors
may also be involved. Additionally, more companies are using equity crowdfunding
for their Series A.

Series A is a point where many startups fail. In a phenomenon known as “Series A

crunch,” even startups that are successful with their seed round often have trouble
securing a Series A round.

Series B FUNDING

What is Series B funding round?

A startup that reaches the point where they’re ready to raise a Series B round has
already found their product/market fit and needs help expanding.

The big question here is: Can you make this company that you’ve created work at
scale? Can you go from 100 users to a 1,000? How about 1 million?

The expansion that occurs after a Series B round is raised includes not only gaining
more customers, but also growing the team so that the company can serve that
growing customer base.

In order to be competitive, any startup needs to hire excellent people in a range of

roles. It’s no longer possible for the founder to “wear all the hats,” so raising enough
money for competitive salaries is essential.

Series B funding usually comes from venture capital firms, often the same investors
who led the previous round. Because each round comes with a new valuation for the
startup, previous investors often choose to reinvest in order to insure that their piece
of the pie is still significant.

Companies at this stage may also attract the interest of venture capital firms that
invest in late-stage startups.
Series C FUNDING

What is Series C funding round?

Companies that make it to the Series C stage of funding are doing very well and are
ready to expand to new markets, acquire other businesses, or develop new
products.

Commonly, Series C companies are looking to take their product out of their home
country and reach an international market. They may also be looking to increase
their valuation before going for an Initial Public Offering (IPO) or an acquisition.

Series C is often the last round that a company raises, although some do go on to
raise Series D and even Series E round — or beyond.

However, it’s more common that a Series C round is the final push to prepare a
company for its IPO or an acquisition.

Valuation at this stage is based not on hopes and expectations, but hard data points.
How many customers does the company have? What’s it’s revenue? What’s it’s
current and expected growth?

Series C funding typically comes from venture capital firms that invest in late-stage
startups, private equity firms, banks, and even hedge funds.

This is the point in the startup lifecycle where major financial institutions may choose
to get involved, as the company and product are proven. Previous investors may
also choose to invest more money at the Series C point, although it is by no means
required.

Series D FUNDING

What is Series D funding round?

A series D round of funding is a little more complicated than the previous rounds. As
mentioned, many companies finish raising money with their Series C. However, there
are a few reasons a company may choose to raise a Series D.

The first is positive: They’ve discovered a new opportunity for expansion before
going for an IPO, but just need another boost to get there. More companies are
raising Series D rounds (or even beyond) to increase their value before going public.
Alternatively, some companies want to stay private for longer than used to be
common. Each of these are positive reasons to raise a Series D.
The second is negative: The company hasn’t hit the expectations laid out after
raising their Series C round. This is called a “down round,” and it’s when a company
raises money at a lower valuation than they raised in their previous round.

A down round may help a company push through a tricky time, but it also devalues
the stock of the company. After raising a down round, many startups find it difficult to
raise again, as trust in their ability to deliver on their promises has eroded. Down
rounds also dilute founder stock and can demoralize employees, making it difficult to
get back ahead.

Series D rounds are typically funded by venture capital firms. The amount raised and
valuations vary widely, especially because so few startups reach this stage.

Series E FUNDING

If few companies make it to Series D, even fewer make it to a Series E. Companies

that reach this point may be raising for many of the reasons listed in the Series D
round: They’ve failed to meet expectations; they want to stay private longer; or they
need a little more help before going public.

Other types of startup funding

While equity funding is a popular option for startups, particularly tech startups, it’s not
the only option for fundraising. In fact, there are number of ways a founder can raise
funds for their startup — and some experts believe it’s best to use a combination of
methods including:

● Venture Capital & Series Seed Funding: A, B, C, D, E

● Crowdfunding
● Small Business Loans
● Small Business Grants
● Private Investors
● Angel Investors