1. Introduction to Entrepreneurship and New Venture Creation Rui Baptista
Masters in Engineering and Management of Technology Masters in engineering Design
Introduction to Entrepreneurship and New Venture Creation
Rui Baptista

2. The New Venture Team

3. The Entrepreneurial Team
Team: a few people with complementary capabilities who are committed to a common objective, goals, and approach for which they hold themselves mutually accountable.
Early in the development of a firm, a leadership team is created to build a business plan and organizational plan
The organizational plan is structured to align the culture of the firm with the leadership team’s goals and values
Entrepreneurship - Rui Baptista

4. Key Venture Team Traits
Cohesion
Teamwork
Integrity
Complementary competencies
Commitment to the long haul
Commitment to value creation
Fairness
Sharing of the harvest
Entrepreneurship - Rui Baptista

5. Organizational Culture and Leadership
Organizational culture is the bundle of values, norms, and rituals that are shared by people in an organization and govern the way they interact with each other and with other stakeholders
Leadership is the process of influencing and motivating people to work together to achieve a common goal by helping them secure the knowledge, power, tools, and processes to do so
Effective leaders coupled with a good organizational plan, a collaborative performance-based culture, and a sound compensation scheme can help align every participant with the goals and objectives of the new firm
Entrepreneurship - Rui Baptista

6. Leadership in New Ventures
A Leader's Role in:
Routine Issues
Challenging and Adaptive Work
Direction
Define problems and possible solutions
Define the challenges and the issues
Team and Individual Responsibilities
Clarify and define roles and responsibilities
Define and discuss the necessity to adapt roles and responsibilities to changing needs
Conflict
Restore order and reduce conflict
Accept useful conflict and use it to define new approaches and strategies
Norms and Values
Reinforce norms and values
Reshape norms and values
Teaching and Coaching
Training and skill learning for existing employees
Teaching and coaching new people
Entrepreneurship - Rui Baptista

7. Characteristics of Good Leaders
Authenticity: consistent actions and words
Decisiveness: willing to act on limited, imperfect information
Focus: create a priority list and stick to it
Care: build relationships and social capital
People Skills: offer helpful feedback and good coaching to all team members
Communication: stimulate conversation and communicate vision
Continuous Improvement: keep learning and energy flowing in the firm, retain optimism
Entrepreneurship - Rui Baptista

8. Key Questions for the Lead Entrepreneur/Founder
Is formation of a team desirable or necessary?
What kind of idea is being pursued?
What talents, know-how, skills, track record, contacts, and resources are currently available?
What talents, know-how, skills, track record, contacts, and resources are needed to succeed?
Who is needed to complement me?
Do I want to grow a higher potential company?
Can more quality human resources be easily added?
Entrepreneurship - Rui Baptista

9. Forming and Building a Team
Three issues for consideration:
Values, goals and commitment
Definition of roles
Peer groups
Entrepreneurship - Rui Baptista

10. Assessing the Initial Value of the Team
Source of the new venture idea (or ideas)
Contribution to screening and business plan preparation
Commitment and risk taken – opportunity costs of time and start-up money
Technical skills, experience, track record, or contacts
Responsibility
Entrepreneurship - Rui Baptista

11. Entrepreneurship - Rui Baptista
Common Pitfalls (I)
Not using the “honeymoon” period of start-up advantageously
Not addressing the questions:
who is in charge?
who makes the final decisions with regard to each field?
how differences of opinion should be resolved
Do not address or recognize the deficiencies of the lead entrepreneur or the management team
Entrepreneurship - Rui Baptista

12. Entrepreneurship - Rui Baptista
Common Pitfalls (II)
Not recognizing that creating and building a new venture is a learning, dynamic process
Not identifying and defusing destructive motivations coming from investors, prospective team members, or the lead entrepreneur
Not valuing trust and integrity as much as other competencies
Entrepreneurship - Rui Baptista

13. Entrepreneurship - Rui Baptista
“Slicing the Pie”
How much stock ownership should go to whom?
Share the wealth with those who helped generate it – i.e. create the value
Project a harvest of at least 5 to 10 times the original investment in order to motivate key team members
Make sure the company prospers and grows, thus creating a large, shared “pie”
Entrepreneurship - Rui Baptista

14. Entrepreneurship - Rui Baptista
Distribution Issues
Differentiation
Implement a reward system that recognizes differences in contributions to value creation among team members
Performance
Reward is a function of performance/result (as opposed to effort)
Flexibility
Acknowledge and reward positive changes in contributions of team members
Entrepreneurship - Rui Baptista

15. Stock-Vesting Agreements
Agreement between venture and team members used to guard against the event that some portion of the stock has been earned and some portion will remain unearned, as when a team member quits or dies; the venture keeps the stock belonging to each team member as a reserve that will be released over an extended (at least three years) period in order to assure that the initial investment is rewarded by future earnings
Entrepreneurship - Rui Baptista

16. Advantages of Stock-Vesting Agreements
Foster longer-term commitment to the success of the venture
Provides a method for a civilized, no-fault corporate divorce if things do not work out
Establishes a period of years, often four or more, where founding stockholders can “earn out” their shares
Entrepreneurship - Rui Baptista