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Software entrepreneurship has a different set of developing strategies than other business start-ups. The development of software, a digital "soft" good, involves different business models, product strategy, people management, and development plan compared to the traditional manufacturing and service industries. For example in the software business, making one or ten million copies of a product cost about the same. Furthermore, the productivity difference between a good and bad employee is ten to twentyfold. As well, software projects tolerate 80 percent lateness and ongoing design changes on a regular basis. [1]
Software entrepreneurship involves a broad range of businesses; from helping people plan daily events to controlling a space shuttle. There are mainly three kinds of software businesses: products, services and content business such as Wikipedia.
The first thing software entrepreneurs should understand is the difference and the interrelationship between products and services business. The software product business is about selling licensed packages to customers. These products help solve a user pain and have potential for growth and profits. One advantage of starting up in this direction is the ability to attract stock market investors and venture capitalists for funding. This business also enjoys enormous economies of scale in selling multiple copies of the same software. The downside of creating products is that software sales are subject to fluctuations. Sales will drop drastically in economic recessions.
The service business involves creating applications for clients that tailor to their business needs. This includes the maintenance of software products they have purchased before. One advantage of service business is that long-term customer contracts can allow the company to survive rough economic times. The downside is that the business needs to attract enough clients to keep developers and consultants busy.
Software companies can also develop a hybrid solution involving a mixture of products and services. [2] In this case, solutions are sold to clients that require extensive customization. Approximately 20 to 50 percent of coding is required for each individual client. Customers purchasing this type of IT solution usually do not switch vendors for long periods of time. [3]
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Funding is done by corporate professionals who are at high level management & cannot leave Job and take the career risk. They are well settled with their high paying jobs. They are interested in business, but do not possess personality of a businessman. At the same time want to engage in business. They can become passive partner, shareholder or investor (isafe notes is an instrument to invest without becoming partner/shareholder) and infuse capital.
These people invest to make money (The dirty but sole objective of business)
This is practically an impossible method as the bank requires security and personal loan guarantees.[ citation needed ]
Governments usually give out non-repayable grants to encourage start-ups. There are also investment tax credits that can be claimed. One thing to be careful about government aid is the lengthy procedures that may be required before obtaining the funds.
Venture capital is risk capital invested into a start-up company at its early stages. Venture capitalists usually invest in start-ups that already have a relatively developed software product and some early sales. They look for products that have a large potential in a growing market with a competitive edge. [4]
Venture capital help offers a large sum of money and often assistance in managing the company. People with software start-up experiences are available for mentoring. There are also help available in assisting the process of going public.
A business plan is a formal written document containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals. It also describes the nature of the business, background information on the organization, the organization's financial projections, and the strategies it intends to implement to achieve the stated targets. In its entirety, this document serves as a road-map that provides direction to the business.
A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship includes all new businesses, including self-employment and businesses that do not intend to go public, startups are new businesses that intend to grow large beyond the solo founder. At the beginning, startups face high uncertainty and have high rates of failure, but a minority of them do go on to become successful and influential.
Venture capital is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth. Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake. Venture capitalists take on the risk of financing risky start-ups in the hopes that some of the companies they support will become successful. Because startups face high uncertainty, VC investments have high rates of failure. The start-ups are usually based on an innovative technology or business model and they are usually from high technology industries, such as information technology (IT), clean technology or biotechnology.
Small businesses are types of corporations, partnerships, or sole proprietorships which have a small number of employees and/or less annual revenue than a regular-sized business or corporation. Businesses are defined as "small" in terms of being able to apply for government support and qualify for preferential tax policy. The qualifications vary depending on the country and industry. Small businesses range from fifteen employees under the Australian Fair Work Act 2009, fifty employees according to the definition used by the European Union, and fewer than five hundred employees to qualify for many U.S. Small Business Administration programs. While small businesses can also be classified according to other methods, such as annual revenues, shipments, sales, assets, annual gross, net revenue, net profits, the number of employees is one of the most widely used measures.
An investor is a person who allocates financial capital with the expectation of a future return (profit) or to gain an advantage (interest). Through this allocated capital most of the time the investor purchases some species of property. Types of investments include equity, debt, securities, real estate, infrastructure, currency, commodity, token, derivatives such as put and call options, futures, forwards, etc. This definition makes no distinction between the investors in the primary and secondary markets. That is, someone who provides a business with capital and someone who buys a stock are both investors. An investor who owns stock is a shareholder.
A business incubator is an organization that helps startup companies and individual entrepreneurs to develop their businesses by providing a fullscale range of services starting with management training and office space and ending with venture capital financing. The National Business Incubation Association (NBIA) defines business incubators as a catalyst tool for either regional or national economic development. NBIA categorizes its members' incubators by the following five incubator types: academic institutions; non-profit development corporations; for-profit property development ventures; venture capital firms, and a combination of the above.
Business development entails tasks and processes to develop and implement growth opportunities within and between organizations. It is a subset of the fields of business, commerce and organizational theory. Business development is the creation of long-term value for an organization from customers, markets, and relationships. Business development can be taken to mean any activity by either a small or large organization, non-profit or for-profit enterprise which serves the purpose of ‘developing’ the business in some way. In addition, business development activities can be done internally or externally by a business development consultant. External business development can be facilitated through Planning Systems, which are put in place by governments to help small businesses. In addition, reputation building has also proven to help facilitate business development.
NComputing is a desktop virtualization company that manufactures hardware and software to create virtual desktops which enable multiple users to simultaneously share a single operating system instance.
Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values than simply economic ones.
Corporate venture capital (CVC) is the investment of corporate funds directly in external startup companies. CVC is defined by the Business Dictionary as the "practice where a large firm takes an equity stake in a small but innovative or specialist firm, to which it may also provide management and marketing expertise; the objective is to gain a specific competitive advantage." Examples of CVCs include GV and Intel Capital.
Lean startup is a methodology for developing businesses and products that aims to shorten product development cycles and rapidly discover if a proposed business model is viable; this is achieved by adopting a combination of business-hypothesis-driven experimentation, iterative product releases, and validated learning. Lean startup emphasizes customer feedback over intuition and flexibility over planning. This methodology enables recovery from failures more often than traditional ways of product development.
Scott Harris Lenet is an American venture capitalist and entrepreneur. He is a co-founder of two venture capital firms: the corporate venture capital firm Touchdown Ventures and the seed stage venture capital firm DFJ Frontier.
Entrepreneurial finance is the study of value and resource allocation, applied to new ventures. It addresses key questions which challenge all entrepreneurs: how much money can and should be raised; when should it be raised and from whom; what is a reasonable valuation of the startup; and how should funding contracts and exit decisions be structured.
Randy Haykin is an entrepreneur, angel investor, venture capitalist and philanthropist who lives in the San Francisco Bay Area. Haykin founded and runs The Gratitude Network, a 501c3 not-for-profit that provides coaching services to social entrepreneurs around the world.
Female entrepreneurs are women who organize and manage an enterprise, especially a business. Female entrepreneurship has steadily increased in the United States during the 20th and 21st century, with female owned businesses increasing at a rate of 5% since 1997. This increase gave rise to wealthy self-made females such as Coco Chanel, Diane Hendricks, Meg Whitman, and Oprah Winfrey.
CrowdTwist was a privately held company headquartered in New York City, New York, purchased by Oracle in 2019. Oracle CrowdTwist is a SaaS based omni-channel loyalty and analytics platform that is designed to allow marketers to acquire, engage and retain customers. The information gathered by CrowdTwist can be used and analyzed by companies to create customer profiles on both an individual and macro level. CrowdTwist investors include StarVest Partners, SoftBank Capital, Fairhaven Capital, KBS+P Ventures and Bertelsmann Digital Media Investments. Scott Matthews serves as CrowdTwist's chief executive officer.
Crowdcube is a British investment crowdfunding platform, established by Darren Westlake and Luke Lang in 2011.
Daniel Conrad Engel is an American CEO and entrepreneur who has worked in the e-commerce and software industries since 1997. Engel led customer acquisition at Picasa, Google, FastSpring, GoToMeeting and GoToMyPC. In 2020, Engel founded Santa Barbara Venture Partners, a venture capital investment fund. He graduated from Tulane University in 1998 with a major in finance and is a past member of Young Presidents' Organization. Engel sits on multiple boards of directors and advisers to tech companies. Since 2018, he has served as board member on a range of local nonprofits that address the critical issue of homelessness. Engel lives in Santa Barbara, California with his two children and his wife, Emily, an environmental activist, art historian, and lecturer at the University of California, Santa Barbara.
Profit and Loss Sharing refers to Sharia-compliant forms of equity financing such as mudarabah and musharakah. These mechanisms comply with the religious prohibition on interest on loans that most Muslims subscribe to. Mudarabah (مضاربة) refers to "trustee finance" or passive partnership contract, while Musharakah refers to equity participation contract. Other sources include sukuk and direct equity investment as types of PLS.
A unicorn bubble is a theoretical economic bubble that would occur when unicorn startup companies are overvalued by venture capitalists or investors. This can either occur during the private phase of these unicorn companies, or in an initial public offering. A unicorn company is a startup company valued at, or above, $1 billion US dollars.