1. 2005-06 Dare to Dream Grants Sponsored by the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies

2. Agenda What is the Dare to Dream program Two types of grants Applications and review Moving beyond Dare to Dream

3. Dare to Dream is a program to encourage students in the thoughtful development of their own businesses and business concepts. The team leader must be an RSB current student. Team members can be from outside RSB and/or the University.

4. Development Stages & ZLI Programs Develop Business Grow Business Ideate BusinessAssess Business Opportunity Identification Integration Business Launch & Acquisition Liquidity Event Manage Turn-around Frankel Fellows Program Michigan Growth Capital Symposium Wolverine Venture Fund ZLI Business Challenge & Intercollegiate Competitions Entrepreneurial MAP domestic & international opportunities Marcel Gani Internship Program (including JumpStart!) Dare to Dream Grant Program AssessmentIntegration Williamson – Early Stage Commercialization Emerging Industries: in-depth exploration of an industry and family of technologies emphasizing entrepreneurial opportunity Entrepalooza: overview of entrepreneurship across multiple industries, business stages and entrepreneurial concepts

5. Dare to Dream Grants are not A competition An endorsement of the business or business concept An endorsement of the management team For academic credit

6. Dare to Dream Grants Encourage the creation, launch and development of new student-led businesses Develop student entrepreneurial skills

7. Dare to Dream Grants are Awarded to businesses and concepts for which the student-led team has convinced ZLI of the –Innovation –Value –Motivation Encouragement for students to –Take risks –Explore opportunities –Expend effort and dedicate time

8. Dare to Dream Applications Assessment Grants force answers the questions –Is there enough “there” there to justify assembling a full plan? –Are market need, proposed solution and target market in line? Integration Grants drive the team to –Dive deeper into the issues of formation and launch –Assemble full business plan to address all concerns of launching and growing a business

9. Dare to Dream Grants and Business Stage Activities Ideate Business Assess Business Opportunity Identification Integration Business Launch Can you articulate the innovation in your idea? Do you have a solution that delivers benefits and solves market pain? Are you in the process of deciding what your business model will be? Have you identified the initial market? Have you articulated the value proposition? Do you understand how this company fits within the industry? Do you have a preferred market entry strategy? Have you conducted your target market research? Are initial financial and cost estimates complete? Do you know the industry’s critical success factors? Have you completed a Porter’s 5 Forces analysis? Is the “whole” or “complete” product package finalized? Has the company begun generating revenues? Are all key managers and board members “lined up” or in place? Has your business plan been distributed for funding? Have you validated assumptions and have a dynamic financial model? Have you recruited and partnered with a beta customer? Have you identified and validated operational milestones? Is your in-depth primary market research complete? If you can answer “yes” to the two “opportunity identification” questions, but not to the all of the questions in these two columns, apply for the Assessment Grant. If “no” to either of these two questions, you are too early for Dare to Dream. Consider applying next term. If “yes” to all the questions on this page, you are most likely beyond Dare to Dream, contact the Zell Lurie Institute BEFORE applying. Have you developed a full investor pitch? If you can answer “yes” to the questions in the first three columns but not all in “integration” and “business launch”, apply for the Integration Grant.

10. Dare to Dream Applications Student-led teams convince ZLI of –Innovation –Value –Motivation Application and review criteria –Different requirements and evaluation for Assessment and Integration

11. Applications Linked to the Zell Lurie Institute web site www.zli.bus.umich.edu Three sections: –Team information –Business concept information –Application and award agreement KNOW WHAT YOU ARE APPLYING FOR!!!

12. Assessment Application What is innovative about the product or service you are proposing? Is this a new or better product, service, technology, business model, or process? Describe the benefits of your product or service for your target market segment. What is the target market for this product or service? What are the initial indications of market potential in terms of customers, units or revenues?

13. Assessment Application What is the nature of the competition in your market? If you are entering a new market, how are customers’ needs being met now? Describe the entrepreneurial aspirations of the management team. Describe the information needed and steps to launch your business.

14. Integration Application What is innovative about the product or service you are proposing? What features make this superior? Describe the benefits of your product or service for your target market segment. What will your solution displace? What is the market potential for this product or service in the initial target market segment? What other attractiveness is there for that segment? What is the nature of the competition in your chosen market? What is the anticipated response from current competitors and potential new entrants?

15. Integration Application What are the industry conditions that allow this company to be competitive in the market? Describe the entrepreneurial aspirations of the management team. Identify the critical success factors for this business. How are they addressed by the team? Provide a one-page financial summary for 2 years.

16. Critical Success Factors CSFs are particular to the business model in a specific industry. In any concern, there are dozens of variables that will determine the success or failure of a business. CSFs are those 2 – 5 variables which “trump” all the others. –Example: general retailing CSF: “location, location, location” –McDonald’s, Starbucks –Example: mass market retailing CSF: logistics and inventory management –Target, Wal-mart –Example: high-end retailing CSF: customer relationships –Neiman-Marcus, Mercedes

17. Critical Success Factors Which decisions or activities, done right, will (almost) always deliver disproportionately positive effects on performance? Corollary – Fatal flaw –What few decisions or activities, if wrong, will (almost) always have severely negative effects on company performance? How will you build your team and/or business model to take full advantage of CSFs?

18. Example of 2-year financials Q1 2005Q2 2005Q3 2005Q4 2005Q1 2006Q2 2006Q3 2006Q4 2006 Unit Price 5.99 Units Sold 1501885165936827849021037 Sales (Dollars) 898.501123.133088.593551.884084.674697.375401.976212.27 Cost of Goods Sold Initial Cost ($.30/Unit) (45.00) (56.25) (154.69) (177.89) (204.57) (235.26) (270.55) (311.13) Gross Margin 853.50 1,066.88 2,933.91 3,373.99 3,880.09 4,462.10 5,131.42 5,901.13 G & A Expenses Printing and Mailing (150.00) Office Supplies (25.00) Website Development (200.00) (2,200.00) (1,500.00) (300.00) Monthly Website Fee (119.85) Officer's Wages (300.00) (500.00) Worksheet Editing Service (200.00) (300.00) (400.00) Accounting and Legal Fees (500.00) (300.00) Selling Expenses Travel (Promotion) (300.00) (600.00) (500.00) Advertising and Promotion (75.00) (1,000.00) (700.00) (500.00) Paypal Fees (26.36) (32.87) (89.87) (103.30) (118.76) (136.52) (156.96) (180.46) Net income before tax $ (542.71) $(3,660.85) $ (850.81) $ 575.84 $ 766.49 $ 1,530.73 $ 2,179.61 $ 2,925.83

19. Evaluation of Applications Most attractive for AssessmentMost attractive for Integration Description of product or service Clearly articulated and understood. Innovation Solution uses new or better technology, process, or business model to deliver product or service that adds value to customer. Market needs, benefits, value Value for the customer is clear and likely to be captured by the firm. Clear value that is likely to be captured by the firm and the firm has an understanding of the degree of displacement of current market solution. Market size Some preliminary and believable indication that market is large “enough.” Market data supports large or large, growing market. Relationship between target and broader market is clear. Industry Attractiveness Market dynamics and forces are supportive of new players OR dynamics can be easily considered and addressed by firm. Competition Competitive environment is favorable to firm and team has identified modes to address. Response expected to be weak and/or competently addressed. Competition and Industry Shows understanding of competitive and industry landscape. Entrepreneurial Aspirations Clearly articulated; convinced of ambitions; will likely continue to engage ZLI. Next Steps Shows understanding of business development process. Critical Success Factors (CSFs) The “right” CSFs have been identified and it is clear the team has the understanding to capture. Financial Planning Based on realistic assumptions, the financials are justifiable and actionable.

20. Moving Beyond Dare to Dream Encouragement for students to –Take risks such as Executing primary research with customers and technologists Undertaking incorporation process Recruiting and building a team –Explore opportunities Is your solution the right solution for market need? Is there a better application or market for your solution –Expend effort and dedicate time Fit these activities into your already busy Michigan schedule

21. Moving Beyond Dare to Dream Tie in to other entrepreneurial activities –ES electives ES615: New Venture Creation ES###: Innovation (new for Winter ’06) –Michigan Business Challenge Iterative, multi-cycle tournament for student-led start-ups. Over $30,000 in prize money –Marcel Gani JumpStart! internships Opportunities for student CEOs to intern at their OWN start-ups

22. Process and Timeline 9/16 Information session 10/14 Fall ’05 awardees announced Fall ’05 applications due 9/304/14 Fall ’05 deliverables due 1/27 Next application deadline: Complete Fall ’05 Assessment deliverables become part of application for Winter ’06 Integration 2/17 Winter ’06 awardees announced 9/7 Winter ‘06 deliverables due

23. Questions? Dare to Dream Grants Paul Kirsch pskirsch@umich.edu

24. Dare to Dream Grants and Business Stage Activities Ideate Business Assess Business Opportunity Identification Integration Business Launch Can you articulate the innovation in your idea? Do you have a solution that delivers benefits and solves market pain? Are you in the process of deciding what your business model will be? Have you identified the initial market? Have you articulated the value proposition? Do you understand how this company fits within the industry? Do you have a preferred market entry strategy? Have you conducted your target market research? Are initial financial and cost estimates complete? Do you know the industry’s critical success factors? Have you completed a Porter’s 5 Forces analysis? Is the “whole” or “complete” product package finalized? Has the company begun generating revenues? Are all key managers and board members “lined up” or in place? Has your business plan been distributed for funding? Have you validated assumptions and have a dynamic financial model? Have you recruited and partnered with a beta customer? Have you identified and validated operational milestones? Is your in-depth primary market research complete? If you can answer “yes” to the two “opportunity identification” questions, but not to the all of the questions in these two columns, apply for the Assessment Grant. If “no” to either of these two questions, you are too early for Dare to Dream. Consider applying next term. If “yes” to all the questions on this page, you are most likely beyond Dare to Dream, contact the Zell Lurie Institute BEFORE applying. Have you developed a full investor pitch? If you can answer “yes” to the questions in the first three columns but not all in “integration” and “business launch”, apply for the Integration Grant.