Lean startup:

Entrepreneurship
Market Opportunity and Sources of Capital
HUM 3011 Creativity, Innovation and Entrepreneurship
Objectives
• Introduce students to the key concepts of lean startup and
entrepreneurship.
• Learn how to structure a pitch deck to explain business ideas to
potential customers and investors in order to raise seed funding.

CLO’s covered:
CLO 3.Differentiate between ideas and viable opportunities.
CLO 4. Demonstrate skills needed to form and develop effective teams with respect for diversity.
CLO 5. Understand organizational innovation and change management to benefit organizations and
society as a whole.
CLO 6. Recognize connections between design thinking, innovation, and entrepreneurship and apply
to their own career path.
Keywords
• Entrepreneur
• Startup
• Product- Market- Fit
• Market Opportunity
• Venture Capital (VC)
• Equity
• Seed funding
• Bootstrapping
• Elevator Pitch
How do you make your
innovation idea come true?
Innovation Stories
• What is PARC?
• Why did Xerox decide to create the PARC? What major events
pushed them to try to innovate?
• What were the major innovations from PARC?
• Why wasn’t Xerox interested in their innovation ideas?
• Why was it easier for Bill Gates and Steve Job to understand the
impact and potential of PARC innovations?
Entrepreneur

An entrepreneur is an individual who creates

a new business, bearing most of the risks and
enjoying most of the rewards.
Video: Reasons NOT to be an entrepreneur
Entrepreneurship
“The pursuit of opportunity beyond resources controlled.”
Howard Stevenson, Harvard Business School

“The identification and exploitation of previously unexploited

opportunities by enterprising individuals.”
Byers, Thomas, Richard Dorf, and Andrew Nelson.Technology Venture: From Idea to Enterprise. 4th ed. New York:
McGraw Hill, 2005.

“The nexus of enterprising individual and promising opportunities”

Shane, Scott, and VenkataramanS. "The Promise of Entrepreneurship as a Field of Research."The Academy of
Management Review25.1 (2000): 217-26. Web.
Startup
A company in the first stage of its
operations.

Startups are founded by one or more

entrepreneurs who want to introduce a
product or service for which they believe
there is a demand in the market.
Source: Investopedia
•How do you know if your business
idea is a good idea?
Product-Market- Fit
• Powerful when customers have demonstrated
their on-going need for your product and a
willingness to pay for it.
Market Opportunity
• A meaningful number of customers experience a
problem/need.
• Customers are aware of the problem, and believe that living
with the problem is not an option.
• Customers have the financial resources and authority to
purchase a solution
• The price customers are willing to pay, and have the ability and
authority to pay, is a price that significantly exceeds the cost of
a solution.
• Is your product/service a pain- killer or a vitamin?
• Is there a burning need in the market?
Market Opportunity
• TAM: Total Available Market
• SAM: Serviceable Available Market
• SOM: Serviceable Obtainable Market = Target Market Share

• Demographics (age, gender, occupation level of

education, geographic location).
• What is the price the customer is willing to pay?
• How can we reach to them, activate, onboard and
engage them and how likely are they going to buy?
• Methods: Surveys, Interviews, Statistics, Focus-
groups, Analytics, Landing Pages.
Example: AirBnB
Market Size

SOM: Serviceable Obtainable Market TAM

Potential number of customers x price estimate SOM
SAM

Price= Cost + Value <3

Sources of Capital
Sources of Capital

Initial Public Offering

The Investor’s mind
• The key gap between
entrepreneur and investor
mindsets is the way they each
evaluate risk.

• Specific financing structures

should bridge the gap in risk
perception and create alignment
between the entrepreneur(s),
investor(s), and other
stakeholders.
Bootstrapping: building a company from the
ground up with nothing but personal savings, and the
cash coming in from the first sales.
Source: Investopedia
Venture Capital
The initial funding (money) from investors used to begin creating a business or
a new product.
Equity: is typically referred to as shareholder equity, or owners equity (for
privately held companies), which represents the amount of money that would
be returned to a company’s shareholders if all of the assets were liquidated.
Royalty: The royalty rate or the amount of the royalty is typically a percentage
based on factors such as the exclusivity of rights, technology, and the available
alternatives
Source: Investopedia.com
 Elevator Pitch
• Elevator pitch is a term used to describe a brief speech that
outlines an idea for a product, service or project.

• The name elevator comes from the notion that the speech
should be delivered in the short time period of an elevator ride,
usually 20-60 seconds.
The Pitch Deck
1. Value Proposition
2. Customer Segments (numbers)
3. Customer Relations
4. Distribution Channels (names)
5. Key Activities
6. Key Resources
7. Key Partners (names)
8. Cost Structure (numbers)
9. Revenue Streams
10. Mock-up (Storyboard, CJM,
Wireframes, etc) Taken from Slidebean.com
 Analyze (data)
Explain the need/problem Visualize
Tell the story!

Why is there a problem and what are

the pains the users are having.
Informative:
• Did you know that … ?
Relatable:
• Have you ever experienced…?
• Imagine that…
• Do you remember when…?
The solution
Highlight the value and the benefits:
• 3x more [active play]
• 30% less [weight]

• Why is your value proposition unique

and innovative?
• What is your WOW feature?
• Why is your business model tailored to
meet your market needs?
Final Presentation
• With your innovation project start working in teams to create the
pitch deck that you would present to your potential
investors/stakeholders to explain your innovative business idea:
• Why?
• What?
• How?
• Research the numbers, facts that would you visually highlight and use
to clearly explain the problem, the solution and the benefits?
• How can you attract the investor’s attention and interest?
• Review your Business Model Canvas exercise.
The Pitch Deck
1. Value Proposition
2. Customer Segments
3. Customer Relations
4. Distribution Channels
5. Key Activities
6. Key Resources
7. Key Partners
8. Cost Structure
9. Revenue Streams
10. Mock-up (Storyboard, CJM,
Wireframes, etc) Taken from Slidebean.com
Tips to prepare your pitch
• Tell a compelling storyline
Why?
• Include hooks.
• Straightforward (Keep it simple) What?

• Numbers, names and facts

How?
• Go visual
• Problem
• Solution
• Costs vs Value Proposition
• Clear-cut Business Model Canvas
 The Pitch Visuals
Why there is a
Problem:
• Facts
• Stats
• Visuals

What is our
Solution
• Value
• Business Model

How we will achieve It

and the Benefits:
• Economic impact
• Social impact
• Environmental impact
Business Model
Business Model
• Highlight the most important
parts of your business model
that add value and bring a
unique proposition to the
market.
• Communication channels,
distribution, access to key
resources or technology. What
makes your business model
more efficient?
Videos

“Karya’s closet” Example of pitch using the BMC structure

Pitch Time

https://vimeo.com/189049381
Focus on
• How much is he asking for?
• What is scrub daddy’s value proposition? What is special?
• Where is he currently selling his product?
• What is the manufacturing cost?
• What is the selling price?
• Is there an intellectual property patent?
• What does he need the investment for?
• What problems do the judges identify with his current cost
structure and value proposition?