1. MBAX 6100 Entrepreneurship & Small Business Management Marshalling Resources
Frank Moyes Leeds College of Business
University of Colorado Boulder, Colorado
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2. Today’s Agenda Jurismonitor Case
Today’s Agenda
Jurismonitor Case
Advantages and disadvantages of strategic alliances & joint ventures
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Speaker: David Hunter CEO of Encrypt Corporation
Deal structure: David Kendall, attorney
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3. Strategic Alliances
Over 75% of technology businesses are active in strategic alliances. 63% said critical or very important. (PricewaterhouseCoopers, Trendsetter Barometer 2001).
Most are informal
Joint venture – jointly owned entity
Speed to market
Access to markets, technology or knowledge
Access to capital
Spin-ins & spin-outs
Access to international markets
Intel 220 active investments in 2004
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4. Strategic Alliances Forms
Marketing – access to distribution e.g. Nestle in Europe
Technological – joint research, e.g. Celebrex for Pfizer
Manufacturing – subcontract operations, e.g. Jurismonitor
Investment – Intel 220 active investments in 2004
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5. Advantages to Strategic Alliances
Gain access to a resource, e.g. production, skills
Economies of scale
Risk & cost sharing
Gain access to international market
Learning
Speed to market
Neutralizing or blocking competitors
One partner has technology, another distribution
Barringer & Ireland, Entrepreneurship
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6. Disadvantages of Strategic Alliances
Loss of proprietary information
Management complexities
High risk of failure
Become dependent on partner
Risk of opportunism
Non performance
Loss of decision autonomy
Clash of cultures
Precludes partnership with another firm or exit
Different styles, objectives
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Barringer & Ireland, Entrepreneurship

7. What Resources Do New Ventures Have?
What Resources Do New Ventures Have?
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8. People Resources? Marshalling Resources Outside service providers
People Resources?
Outside service providers
CCG & Earnst & Young
Board of Directors
Ferranti
Advent
Angels invest in people they like
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9. Physical Assets?
Sports Bra Entrepreneur
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10. Financial Resources?
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11. Social Resources?
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12. Own or Control Resources?
Own or Control Resources?
“Key is not to own resources, but to have use of & be able to control or influence deployment”, Timmons
Ask yourself where is the value added of my venture? R & D? Sales & Marketing? Manufacturing? Customer Service?
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13. Attitude What is Bootstrapping?
What is Bootstrapping?
“Launching ventures with modest personal funds”, Bhide
Using Other People’s Resources (OPR), Timmons
Scrooge mode
Attitude
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14. Bootstrapping Examples
Bootstrapping Examples
Make vs buy
Volume purchasing
Hiring employees vs. temps or subcontract
Employee benefits
Office and location
Used equipment
PR vs. advertising & promotion
Strategic alliances - Jurismonitor
Grants
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15. Benefits of Bootstrapping Enhances Funding
Benefits of Bootstrapping Enhances Funding
Need less capital
Reduces financial exposure
Reduces amount of money need to raise - less dilution
Reduces risk
Obsolescence
Lower sunk costs
Investor's love it
Proves concept and management team
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16. Benefits of Bootstrapping Provides Flexibility
Benefits of Bootstrapping Provides Flexibility
Fluctuating conditions and uncertainty
Difficulty in predicting what resources are needed
Make changes quickly
Permits strategic experiments
Cost of making a mistake is minimized
Mistakes less likely to be fatal
Inexperienced entrepreneurs can screw-up
Don’t have the pressure of high growth
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17. Benefits of Bootstrapping Improves Problem Solving
Benefits of Bootstrapping Improves Problem Solving
Like zero inventory in JIT
Reveals hidden problems
Forces management to solve them
Focus is on profits
Forces management to solve problems
Price for profitability
Reduces costs
Lower fixed costs
Higher variable costs, but high Gross Profit Margin solves
Lower break-even point
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18. Benefits of Bootstrapping Sets the Right Culture
Benefits of Bootstrapping Sets the Right Culture
Employees
Suppliers
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19. Bootstrapping Summary
Bootstrapping Summary
Requires less capital
Lowers risk
Improves decision making
Enhances flexibility
Focus on profitability
Investors love it
Establishes culture
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A Bhide, Bootstrap Finance, HBR

20. Can An Entrepreneur Have Too Much Money?
Can An Entrepreneur Have Too Much Money?
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21. What Is the Greatest Source of Cash?
What Is the Greatest Source of Cash?
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22. Marshaling Resources Conclusion
Marshaling Resources Conclusion
Control rather than own - OPR
Money is not the solution. May be the problem.
Bootstrapping is an attitude
What is a downside of focusing on resources?
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