A few days back, we had a session by Jorge Mata . This session was part of course ITTECHSTARTUP – ‘Managing the Tech Startup’ by Prof Enrique Dans. He is a serial entrepreneur, and talked on the topic of raising capital for the startup. He believes that an entrepreneur ego needs to be acknowledged by self, and handled carefully. Major decisions, such as how much share to give up, how much money to raise should consider the personal need of ego in keeping control of the startup. One should also consider the time of selling a company as critical. Too early or too late will not be good. Another important point was that the idea of the startup should be scalable. There is no dearth of good idea. But, only those succeed which are scalable. He believed that Valuation targets should be in range of 2-3 million Euros for Angels investors stage to reach the 7-8 million for VCs stage. As Angels usually look for 30-35% of company, and VCs between 15% and 30%., these ballpark figure of valuations will still leave enough money to be made for entrepreneur.
I must say that this topic is one of the few where corporate entrepreneurship and traditional startup entrepreneurship differ a lot. Raising money for a startup within large enterprise generally involve only pitching idea against the senior management, and getting approvals from them. Also, there is no concept of becoming cash-rich by selling your entire stake once the startup has become successful.
However, there are still some similarities between the two kinds of entrepreneurship on topic of raising capital and gaining from startups. To understand it clearly, it is important to consider not only cash, but all gains including career growth, higher authority, promotions, etc. To start with, it is important to consider only the ideas which are scalable, similar to in case of traditional entrepreneurship. Only those ideas succeed which are scalable. The larger organisation should be able to take the working idea later, and expand in that direction. In fact, this makes the scalability factor even more important. Also, an entrepreneur within an organisation should also consider his ego in major decision. A division head who is driving the new idea has to eventually handover the idea to the senior management in most cases to take it forward. The big questions remains about the time to make this transition. If it is done too early, the management may not appreciate the complete potential, and may not “value” the efforts of the entrepreneur to reward him with benefits as expected. Similarly, waiting too long may also spoil the benefits for the intrepreneur similar to a traditional startup entrepreneur.
startupinanenterprise 