IdeasInc StartUp2013! How Venture Capitalists value your business?

It has been 3 months since I have posted my reflections as I was really swamped with waves of challenges that kept hitting both Envisage and Collegify. I will perhaps share some of those in later posts so that aspiring entrepreneurs can learn from my pitfalls too, but well... That's just the common journey which all entrepreneurs have to face!

Nonetheless, I will like to share with you some key lessons learnt from the StartUp2013 conference which I just attended last Saturday @ *SCAPE!

As spoken by Mr Leslie Loh from Red Dot Ventures, how enterprises are valued by a Venture Capitalists are through the following elements:

1. Market validity of the product/services - If your product/services has a proven market segment with paying clients, then you will have a much stronger pitch. If you are simply still fondling with an idea or prototype with non-paying clients, your business is still too early for venture stage funding.

2. Maturity of founders or board members/advisers - The wisdom and expert knowledge/background of the founders/advisers matters. This provides the investors the confidence on the probability of success of your business. However, this might not be impeded by your age (If you are too young), what matters is that you show the level of maturity in understanding what will feasibly allow your business to succeed. But that being said, please do also retain your passion and idealism to succeed. (Perhaps a good mix of personalities displayed within your team will assist in portraying this to your investors)

3. Stage of the enterprise - A growth stage venture with proven track record will always garner a better deal than an earlier stage business. Hence, you have to be really realistic with your expectations on how you value your business. To put it simply, if you have a business with a proven revenue stream and working product that shows demand, you will definitely be able to negotiate for a better valuation. And that's what venture stage fund providers will be requiring.

In addition, you have to understand that return of investment expectations of VCs, are actually on the level of 10x to 30x. Hence, if you are unable to convince them of such profit potential, you will likely not be able to attract their investments. Thus, availability and growth plans beyond the shores of Singapore is critically important!

Alright guys, all the best to your enterprise journey! :)

*Scape presents 'Hear Me Out!' (In conjunction with Envisage's Gen.SEs workshops)

Thinking of starting your own Social Enterprise while attending our workshops? Need a place to pitch and get funds to kick start your business? Consider joining Hear Me Out - a pitching competition organised by *SCAPE! 

"Got a brilliant idea that is itching your brain? Tell us, we’re all ears!
No doubt, we have gaps in our society. The marginalised can definitely do more with our help. Like the saying goes – if not you, then who?
If you have an idea that can better the community, tell us, we can support you with seed funds of up to $7,000!"

Join us tomorrow at *SCAPE, 7:30pm, to find out more! (alternatively you can PM us for further inquiries)

Visit Gen.SEs FB for more information: http://www.facebook.com/EnvisageGen.SEs
Sign up for our FREE Social Entrepreneurship training at: Sign up here! 

UNITED NATIONS SYSTEM‐WIDE ACTION PLAN ON YOUTH

For all who might be interested about Youths-related issues, here is the survey results and action plan just recently shared with me by UN:

http://www.un.org/esa/socdev/unyin/documents/YouthSWAP/SWAPsurveyrespondants.pdf


Over 13,500 respondents from 186 countries participated in the survey. So it might provide you with some interesting perspectives on the variety of issues which are currently being discussed internationally.

Youth For Social Entrepreneurship Interview on Envisage

Heh all

Have you all visited this awesome blog "Youths For Social Entrepreneurship"?

They just wrote an awesomely comprehensive article about Envisage start-up journey, my personal views  on the landscape, and some tips I have for people who wish to start their own SEs. Link to article is provided below! Click it, Read it! It's long, but I believe you will learn a thing or two from it.

http://youthfse.com/2013/05/06/envisage-education-social-entrepreneurship-for-the-next-generation/

Some excerpts:


Here’s what he thinks:

- “Start small – don’t be afraid to start small, and don’t be afraid to fail. And when it fails – which it will, it definitely will, regular enterprises fail 90% of the time – you must create space for it, and not drag others down, especially your beneficiaries.”

- “Youth entrepreneurs must start somewhere. If they don’t start, they’ll never know whether it works, and if they don’t start, it will never happen, basically. Do a trial run, do research, see if there’s a market, do prototyping, have a great sensitivity of what’s happening…. Don’t just think about it, or you’ll never know whether it’ll work.”

- “Figure out who you want to help. You don’t start a social enterprise just because you feel like it.”

Social Entrepreneurship, “What is it and why should you get involved?”

Social entrepreneurship is an increasingly popular term in Singapore, often widely defined as social oriented organizations that sustainably create social and/or environmental impact, while ensuring that it is economically viable (Double or triple bottom –lines).

As written on the Social Enterprise Association (SEAssociation) website, Social Enterprises operate in the form of 4 commonly known business models:
1. Plough-back model: Ploughs all/part of their profits into a non-profit cause/organization.
2. Subsidies model: Sells its products in the market at normal or higher prices, and transfer all/part
of its profits to a specific beneficiary community by selling to them at large discounts.
3. Work-integration model: Aims to provide employment to the marginalized.
4. Social needs model: Creates sustainable solutions towards a social cause.

Additionally, non-profit and for-profit organizations with mentioned attributes are both till date acceptable forms of social enterprises.

Upon researching into the reasons why youths commonly get involved in social entrepreneurship, I have observered the following:
1. The idea of doing “good” sustainably, with the project’s financial feasibility under consideration, has increasingly been viewed as a more ideal way to create social change.
2. Social entrepreneurship provides youths the ability to exercise their creativity, innovation and entrepreneurial skills for the benefit of a social cause which they are equally passionate about.
3. The process of starting a social enterprise provides the founders the opportunity to acquire entrepreneurial skills, experiences and networks which will help them in future start-ups.
4. They simply just want to do “good”! By helping their beneficiaries achieve better quality of life or standard of living through their social enterprise.

However, beyond all the lofty ambitions and motivations, every social entrepreneur wanna-be should take important note that the route to creating a successful social enterprise is no easier than a for- profit one. Hence, similar to the statistics of 9 in 10 start-ups failing, social enterprises are no different!

Therefore, prior to starting a social enterprise, please beware of the risk of failing, and even worse, the risk you are potentially exposing to the beneficiaries you are helping in the event that you fail. There have already been a few cases, where many disadvantaged after giving up their previous jobs to join a social enterprise ended up becoming unemployed as enterprise went bankrupt within just a few months of starting up.

Nonetheless, I still do encourage youths to get into the business of social entrepreneurship. Despite the risk, the extensive rewards of social problems being resolved sustainably through successful social enterprises should not be undermined. In addition, even if one fails, the entire start-up experience will definitely transform every founder into a person of great character and entrepreneurial spirit.

- Written by Stanley Chia, Managing Director of Envisage Education Pte Ltd, a registered social enterprise of the Social Enterprise Association