Examiners’ commentaries 2023

Examiners’ commentaries 2023

(May)

MN3194 Entrepreneurship

Important note

This commentary reflects the examination and assessment arrangements for this
course in the academic year 2022–2023. The format and structure of the
examination may change in future years, and any such changes will be publicised
on the virtual learning environment (VLE).
Information about the subject guide and the Essential reading references
Unless otherwise stated, all cross-references will be to the latest version of the
subject guide or online course. You should always attempt to use the most recent
edition of any Essential reading textbook, even if the commentary and/or online
reading list and/or subject guide refer to an earlier edition. If different editions of
Essential reading are listed, please check the VLE for reading supplements – if
none are available, please use the contents list and index of the new edition to
find the relevant section.

General remarks

Learning outcomes
At the end of this course and having completed the Essential reading and Activities,
you should be able to:
• describe the theoretical insights and recent empirical findings of the economics
of entrepreneurship
• explain how entrepreneurship drives economic change and growth
• outline the historical context and impact of social entrepreneurship
• analyse viable business models
• design market research frameworks, develop and evaluate business models.

This course is about entrepreneurship both from an economics and practitioners

angle and shows how economics can contribute to our understanding of
entrepreneurship. The course also sheds light on the societal impact of
entrepreneurship and its utility for economic development. It further provides a range
of practical skills such as developing business models, designing market research
frameworks, creating product development cycles, establishing customer relationship
channels, raising seed capital, pricing strategies, and protecting intellectual property.

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MN3194 Entrepreneurship

Planning your time in the examination

Many candidates appear to spend a disproportionate amount of time answering two
or three questions. This is a risky strategy. You should always attempt all questions
and spend an appropriate amount of time on each to increase the likelihood of being
awarded a pass. Make sure you use short and concise sentences and your
responses are to the point to improve your chances that the examiner actually gets
your point.

What are the examiners looking for?

You are expected to answer the question in a straightforward and concise manner.
In doing so you are expected to demonstrate a clear knowledge of the subject and
be selective by including material that is relevant to the question and excluding
material that is tangential or irrelevant. Candidates should focus on the questions
asked rather than simply reciting pre-learned subject content. Examiners penalise
answers that include all of the material that a candidate knows about the topic as it is
either evidence of an inability to exercise judgement or a lack of understanding as to
what the question is asking. You should ensure that you read the question thoroughly
and respond adequately. The examination paper is structured in a way that requires
candidates to demonstrate: (i) knowledge and understanding, (ii) application of
knowledge and critical thinking, (iii) demonstrate solid and practical experience
gained from doing the exercises in the subject guide. Failure to provide a good
answer can increase your risk of failing the examination. We therefore strongly advise
candidates to ensure that they are well-prepared. The subject guide usually includes
all of the relevant knowledge so good
familiarity with the subject guide and practical experience gained throughout the
course is highly advisable. Candidates are sometimes overly descriptive in their
answers, as a consequence, they do not provide a critical perspective on the material
presented. Candidates are expected to warrant their claims by citing literature or
giving examples, rather than just expressing unsubstantiated opinions. Avoid a
descriptive approach and consider writing in a way that articulates different
viewpoints. Better answers are able to link these to different theoretical frameworks
and practical evidence, and provide references of key authors in the academic
literature. The examiners like answers to be clearly and logically set out, and to
include a beginning, a middle and an end.
• Beginning: present the main argument in the introductory paragraph.
• Middle: develop and substantiate the argument in the main body of the answer.
• End: use the concluding paragraph to summarise the main points of the
argument.

Your answer must address the given question, and so it is important when answering
the question to always ask yourself ‘how is each point I am making relevant to the
question?’ By doing so, you should be able to filter out information that is irrelevant
to the question and only keep the parts that are. Do not leave it to the closing
paragraph of your answer to make your argument explicit. Also, you need to
demonstrate clear evidence of practical experience you have gained by completing
all the tasks in the subject guide.

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 Examiners’ commentaries 2023

Examination revision strategy

Many candidates are disappointed to find that their examination performance is

poorer than they expected. This can be due to a number of different reasons and
the Examiners’ commentaries suggest ways of addressing common problems
and improving your performance. We want to draw your attention to one particular
failing – ‘question spotting’, that is, confining your examination preparation to a
few question topics which have come up in past papers for the course. This can
have very serious consequences.
We recognise that candidates may not cover all topics in the syllabus in the same
depth, but you need to be aware that examiners are free to set questions on any
aspect of the syllabus. This means that you need to study enough of the syllabus
to enable you to answer the required number of examination questions.
The syllabus can be found in the Course information sheet in the section of the
VLE dedicated to this course. You should read the syllabus very carefully and
ensure that you cover sufficient material in preparation for the examination.
Examiners will vary the topics and questions from year to year and may well set
questions that have not appeared in past papers – every topic on the syllabus is
a legitimate examination target. So although past papers can be helpful in
revision, you cannot assume that topics or specific questions that have come up
in past examinations will occur again.
If you rely on a question spotting strategy, it is likely you will find yourself
in difficulties when you sit the examination paper. We strongly advise you
not to adopt this strategy.

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MN3194 Entrepreneurship

Examiners’ commentaries 2023

(May)

MN3194 Entrepreneurship

Important note
This commentary reflects the examination and assessment arrangements for this
course in the academic year 2022–2023. The format and structure of the
examination may change in future years, and any such changes will be publicised
on the virtual learning environment (VLE).
Information about the subject guide and the Essential reading references
Unless otherwise stated, all cross-references will be to the latest version of the
subject guide or online course. You should always attempt to use the most recent
edition of any Essential reading textbook, even if the commentary and/or online
reading list and/or subject guide refer to an earlier edition. If different editions of
Essential reading are listed, please check the VLE for reading supplements – if
none are available, please use the contents list and index of the new edition to
find the relevant section.

Comments on specific questions

Candidates should answer EIGHT of the following TEN questions: All FOUR
questions from Section A (10 marks each), and FOUR from Section B (15 marks
each). You are strongly advised to divide your time accordingly.
SECTION A
Answer all four questions from this section.
Question 1
a) Discuss how the underpinning theory of economy and society, as viewed
by Schumpeter and Jean-Baptiste, defines entrepreneurship.
b) Discuss why Peter Drucker believes that entrepreneurs are not innovative
per se.

Reading for this question

The material for this question is outlined in Chapter 1 of the subject guide.
Approaching the question
a) When addressing this question, candidates should delve into the foundational
theories of economy and society as articulated by Schumpeter and Jean-Baptiste
Say. They should begin by explaining Schumpeter's concept of "creative
destruction," which posits entrepreneurs as catalysts of change through
innovative disruption. Emphasise how this perspective redefines
entrepreneurship beyond mere business founding to encompass the
transformative process of innovation. Additionally, candidates should explore
Jean-Baptiste Say's notion of entrepreneurship as the organisation of production

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 Examiners’ commentaries 2023

for profit, highlighting the strategic and proactive nature of entrepreneurial

endeavours. By integrating these perspectives, candidates can provide a
comprehensive definition of entrepreneurship that reflects its dynamic role in
shaping economic and social landscapes.

b) Candidates should consider Peter Drucker's nuanced perspective on the

relationship between entrepreneurship and innovation. They should begin by
explaining Drucker's assertion that entrepreneurs are not inherently innovative
individuals but rather possess the vision and initiative to recognize and capitalise
on opportunities for change. Emphasise Drucker's view of innovation as a tool
utilised by entrepreneurs to exploit evolving market dynamics and create value.
Encourage candidates to critically analyse Drucker's argument, considering the
implications for our understanding of entrepreneurship and the role of innovation
in driving economic growth. By engaging with Drucker's perspective, candidates
can offer a nuanced exploration of the relationship between entrepreneurship and
innovation, enriching their discussion of the broader societal impact of
entrepreneurial endeavours.

Question 2
a) Explain why Koltai believes that innovation is not the same thing as
technology.
b) Explain why Schumpeter distinguishes entrepreneurs from other business
people and how this impacts economic output.

Reading for this question

The material for this question is outlined in Chapter 1 of the subject guide.
Approaching the question
a) In explaining why Koltai believes that innovation is not synonymous with
technology, candidates should consider his perspective on the relationship
between innovation and entrepreneurship. Koltai contends that while technology
often facilitates innovation, it is not the sole determinant of innovative progress.
Candidates should highlight Koltai's assertion that innovation encompasses a
broader spectrum of creativity and problem-solving beyond technological
advancements. He emphasises that innovation can manifest in various forms,
including innovative business models, marketing strategies, or organisational
structures, which bring about positive change and create value. By recognizing
the distinction between innovation and technology, Koltai underscores the
importance of creativity, vision, and adaptability in entrepreneurship. Candidates
should engage with Koltai's perspective, encouraging individuals to explore
diverse avenues for innovation beyond the confines of technological solutions,
thus enriching their understanding of entrepreneurship as a dynamic force for
positive change.

b) In elucidating why Schumpeter distinguishes entrepreneurs from other business

people and how this distinction impacts economic output, candidates should
delve into Schumpeter's concept of "creative destruction" and its implications for
entrepreneurial activity. Schumpeter argues that entrepreneurs are distinct from
other business people because they are agents of change who drive innovation
through disruptive means. Candidates should emphasise Schumpeter's view that
entrepreneurs introduce new ideas, products, or processes that challenge
existing norms and reshape industries. By disrupting established markets and
creating new opportunities, entrepreneurs play a pivotal role in driving economic
growth and progress. Candidates should also consider how Schumpeter's

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MN3194 Entrepreneurship

perspective highlights the dynamic nature of entrepreneurship, emphasising the

importance of creativity, risk-taking, and visionary leadership in fostering
innovation-driven economies. By engaging with Schumpeter's theories,
candidates can gain insights into the transformative impact of entrepreneurship
on economic output and societal development.
Question 3
a) Discuss why the effect of creative destruction, as defined by Christensen,
can provide smaller firms with an unfair advantage.
b) Explain why after about 10 years of inception the effects of new business
formation on the economy fades away according to Kritikos.

Reading for this question

The material for this question is outlined in Chapter 2 of the subject guide.
Approaching the question
a) Understanding creative destruction, as defined by Christensen, is pivotal for
grasping its impact on smaller firms. In a good response, candidates elucidate
the concept, emphasising its role in driving innovation and market disruption.
They explain how smaller firms leverage disruptive technologies or business
models to challenge established players. Agility and flexibility are highlighted as
key advantages, allowing smaller firms to swiftly adapt to changing market
demands and exploit emerging opportunities. Moreover, candidates discuss the
potential for niche market focus, enabling smaller firms to cater to specific
customer needs that larger incumbents may overlook. Examples such as Airbnb
disrupting the hospitality industry or Netflix revolutionising entertainment
distribution offer tangible illustrations of successful disruptions. An excellent
response goes beyond surface-level analysis to explore the deeper implications
of creative destruction. It examines the cultural and organisational factors that
contribute to the success of smaller firms in disruptive environments. Factors like
risk-taking propensity, flat hierarchies, and a culture of experimentation are
explored in depth. Furthermore, candidates critically evaluate the challenges
faced by larger incumbents, such as bureaucratic inertia, resistance to change,
and legacy systems. They consider the broader socio-economic impacts of
creative destruction, including job displacement and industry transformation,
demonstrating a comprehensive understanding of the phenomenon.

b) Candidates are tasked with explaining why the effects of new business formation
on the economy diminish approximately 10 years after inception, as outlined by
Kritikos. In crafting their responses, candidates should delve into the various
factors contributing to this phenomenon. A good response will touch upon key
points, such as the initial burst of entrepreneurial activity leading to job creation,
innovation, and economic dynamism. Candidates should discuss how as new
businesses mature, they may encounter challenges such as increased
competition, regulatory burdens, and limited access to financing. Additionally,
candidates should highlight the natural progression of start-ups into established
firms, which may result in a decline in innovation and growth over time. An
excellent response will provide a deeper analysis, exploring the nuanced
interplay between these factors and their implications for long-term economic
development. Candidates should critically assess the impact of start-ups relative
to larger, established firms, considering how their size and scale may influence
their ability to drive sustained economic transformation. Moreover, candidates
should evaluate the role of policymakers and stakeholders in addressing the
challenges faced by new businesses and sustaining their contribution to
economic growth beyond the initial 10-year period.

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 Examiners’ commentaries 2023

Question 4
a) Discuss how you would apply the PEST analysis framework in order to
determine the level of stability of an economy.
b) Discuss at what stage of a startup venture capital or public sector funding
may be strategically more advantageous.

Reading for this question

The material for this question is outlined in Chapters 3 and 15 of the subject guide.
Approaching the question
a) Understanding the stability of an economy is paramount for businesses seeking
to make informed decisions. To assess this stability comprehensively, the PEST
analysis framework is indispensable. This framework delves into the external
factors impacting an economy's stability, including political, economic, social, and
technological dimensions. In this exam question, students are tasked with
outlining how they would apply the PEST analysis framework to determine the
level of stability of an economy. To excel in their response, students must
demonstrate a deep understanding of the PEST framework and its application in
real-world scenarios. The question aims to evaluate students on several levels.
Firstly, it assesses their grasp of the components of the PEST analysis
framework. Secondly, it challenges them to apply this framework effectively to
analyse external factors influencing economic stability. Lastly, it encourages
critical thinking by prompting students to consider the multifaceted nature of
economic stability and the diverse factors that contribute to it. To craft a
comprehensive response, students should structure their answer methodically.
They should begin by introducing the PEST analysis framework and its four
components. Subsequently, they should delve into each component, discussing
relevant political, economic, social, and technological factors and their potential
impact on economic stability. Finally, students should synthesise their analysis to
provide an overall assessment of the economy's stability based on the insights
gained from the PEST analysis. By engaging with this question, students not only
demonstrate their proficiency in applying analytical frameworks but also
showcase their ability to think critically about complex economic issues. Through
this process, they develop skills essential for strategic decision-making and
problem-solving in the business world.

b) A good answer to this question would:

• Identify key factors influencing the choice between venture capital (VC) and
public sector funding, such as the stage of startup development, industry-
specific requirements, and the strategic objectives of the venture.
• Provide a clear analysis of the advantages and disadvantages associated
with each funding source, considering factors like control, access to
resources, and long-term sustainability.
• Offer relevant examples or case studies to illustrate the strategic implications
of funding decisions at different stages of startup growth.
• Demonstrate a logical structure, coherent arguments, and evidence-based
reasoning to support the discussion.
• Show an understanding of the broader entrepreneurial ecosystem and the
interplay between funding sources, market dynamics, and startup success
factors.

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MN3194 Entrepreneurship

An excellent answer would:

• Provide a comprehensive evaluation of the strategic advantages and
challenges associated with both venture capital and public sector funding,
going beyond surface-level analysis to offer nuanced insights.
• Incorporate a range of perspectives, drawing upon diverse sources such as
academic literature, industry reports, and real-world examples to enrich the
discussion.
• Anticipate counterarguments and address potential objections,
demonstrating critical thinking and the ability to consider multiple viewpoints.
• Offer original insights or propose innovative strategies for navigating funding
decisions based on emerging trends or evolving market conditions.
• Showcase exceptional clarity of expression, precision in argumentation, and
a sophisticated understanding of the complex interrelationships between
funding, entrepreneurship, and economic development.

SECTION B
Answer any four of the following questions.
Question 5
a) Discuss why the old paradigm of the false dichotomy between “it’s a
business” or “it’s a charity” (Schwab Foundation) is no longer valid.
b) Explain the Schwab Foundations definition of ‘learning process by design’
is believed to be paramount for success.

Reading for this question

The material for this question is outlined in Chapter 4 of the subject guide.
Approaching the question
a) In addressing the question of why the traditional dichotomy between "it's a
business" or "it's a charity" is outdated, a good answer would provide a basic
explanation of the historical context behind this dichotomy and then delve into
the reasons why it is no longer relevant in today's entrepreneurial landscape. It
might discuss how modern businesses are increasingly embracing social
responsibility and sustainability practices, blurring the lines between profit-driven
motives and philanthropic goals. The response could also highlight examples of
successful social enterprises that have demonstrated how businesses can create
positive social impact while remaining financially viable. An excellent answer, on
the other hand, would not only provide a comprehensive analysis of why the old
paradigm is no longer valid but also offer insights into the evolving nature of
business models and their impact on society. It would explore the concept of
"shared value" and how businesses are integrating social and environmental
considerations into their core strategies to drive long-term success. Moreover, an
excellent answer would critically evaluate the limitations of both traditional
business and charity models, proposing alternative frameworks or approaches
that better reflect the complex challenges of the modern world. Additionally, it
might draw on relevant academic literature, case studies, and current trends to
support its arguments and provide a nuanced understanding of the topic.

b) In addressing the question concerning the significance of the Schwab

Foundation's notion of "learning process by design" for achieving success, a
good answer would provide a clear explanation of what this concept entails and
its relevance in fostering growth and development. It might discuss how

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 Examiners’ commentaries 2023

intentional and structured learning processes can help individuals and

organisations adapt to changing environments, overcome challenges, and
capitalise on opportunities. The response could also include examples of how
companies or entrepreneurs have benefited from implementing deliberate
learning strategies in their operations. An excellent answer, however, would not
only define the concept of "learning process by design" but also critically analyse
its implications for success in different contexts. It would explore how this
approach differs from passive or ad-hoc learning practices and why it is
considered essential for achieving sustainable outcomes. By drawing on relevant
research findings, case studies, and real-world examples, an excellent answer
would provide a comprehensive understanding of the topic and its practical
implications.

Question 6
a) Discuss why Amy Blyth believes that the main types of organisations
haven’t served societies’ needs well enough in the long term.
b) Discuss how the Four Factor Value Matrix by Kuppers can be applied to
address the above issue.

Reading for this question

The material for this question is outlined in Chapters 4 and 5 of the subject guide.
Approaching the question
a) In evaluating responses to why Amy Blyth believes that conventional
organisational models have failed to adequately address societal needs in the
long term, several criteria distinguish between a good and an excellent answer.
A good answer would accurately summarise Blyth's argument, highlighting points
such as the pursuit of short-term goals by corporations, leading to a neglect of
broader societal concerns. It may cite Blyth's assertion regarding the economic
crisis as evidence of this failure, emphasising the detrimental impact of short-
termism, corruption, and greed on economic stability and civic institutions. An
excellent answer, however, would go beyond a mere recapitulation of Blyth's
points, delving deeper into the underlying reasons for the inadequacy of
traditional organisational models. It might explore the structural limitations of for-
profit entities in addressing complex, long-term societal challenges, such as
climate change and inequality. Additionally, an excellent response may critically
evaluate Blyth's arguments, considering potential counterarguments or
alternative perspectives. By engaging with the text in a nuanced and analytical
manner, an excellent answer demonstrates a sophisticated understanding of the
issues at hand, offering insightful reflections and interpretations that enrich the
discussion.

b) In evaluating responses to the question "Discuss how the Four Factor Value
Matrix by Kuppers can be applied to address the above issue," a distinction
between a good and an excellent answer can be made based on several criteria.
A good answer would provide a basic understanding of the Four Factor Value
Matrix, outlining its components (Need, Barriers, Frequency, and Scale) and their
significance in analysing business models. It might offer a brief explanation of
how each factor contributes to evaluating the effectiveness and potential of a
business model, perhaps citing examples from the provided text to illustrate its
application. Conversely, an excellent answer would delve deeper into the
application of the Four Factor Value Matrix, demonstrating a comprehensive
understanding of its relevance in assessing business models in the context of
addressing societal needs. It would provide detailed insights into how each factor

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MN3194 Entrepreneurship

can be utilised to analyse and optimise a business model's ability to meet specific
societal needs effectively and sustainably. Additionally, an excellent response
might explore potential challenges or limitations in applying the Four Factor Value
Matrix and propose strategies for overcoming them. By offering nuanced
interpretations and critical reflections, an excellent answer showcases a
sophisticated understanding of the topic and its practical implications.

Question 7
a) You have been hired as a startup consultant by a B2C startup that has
developed a new car sharing app. The startup is now looking to scale the
business into the US market. Your initial task is to conduct a competitor
analysis. Explain which methodologies you would choose.
b) The startup is now looking to include motorbikes and e-scooters. What is
your route-to-market strategy?

Reading for this question

The material for this question is outlined in Chapter 8 of the subject guide.
Approaching the question
a) In formulating a response, a good answer would delineate the traditional top-
down and bottom-up methodologies for competitor analysis, demonstrating a
solid understanding of foundational market research approaches. It would also
briefly touch upon the importance of B2B strategies in the context of the car-
sharing industry. On the other hand, an excellent answer would not only outline
the traditional methodologies but also delve into lateral market scanning
techniques, showcasing a comprehensive understanding of competitive analysis
beyond conventional boundaries. It would provide specific examples of how B2B
strategies, such as partnerships with automotive manufacturers or fleet
management companies, could impact market scalability. This answer would
reflect critical thinking skills by recognizing the nuanced dynamics of the car-
sharing sector and integrating B2B perspectives to offer strategic insights for
market penetration in the US.

b) A good answer would provide a structured route-to-market strategy, addressing

key elements such as customer segmentation, market analysis, and distribution
channels for motorbikes and e-scooters. It would demonstrate a solid
understanding of the market landscape and potential challenges, proposing
viable solutions to overcome them. Additionally, a good answer would
incorporate insights from the chapter's discussion on B2B strategies, leveraging
partnerships and alliances to enhance market reach and competitiveness. An
excellent answer, on the other hand, would go beyond the basics to offer
innovative and well-supported recommendations. It would present a detailed and
nuanced analysis of market dynamics, competitor strategies, and emerging
trends in the transportation sector. Moreover, an excellent answer would
showcase creativity in identifying niche market segments and proposing
differentiated value propositions tailored to diverse customer needs. It would also
explore synergies between car-sharing, motorbikes, and e-scooters, devising an
integrated route-to-market strategy that maximises synergies and capitalises on
growth opportunities.

Question 8

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 Examiners’ commentaries 2023

a) You have been hired as a startup consultant by a travel insurance startup

that struggled during the Corona pandemic as sales plummeted. What
would be your strategy to get sales up?
b) With your support the startup was eventually able to increase revenues and
is now ready to scale. Discuss your customer development process and
how many pivots should be built in and why.

Reading for this question

The material for this question is outlined in Chapters 8 and 9 of the subject guide.
Approaching the question
a) Candidates are tasked with devising a comprehensive strategy to revitalise sales
for a travel insurance startup that faced challenges during the COVID-19
pandemic. Drawing from the principles of customer development and hypothesis
testing discussed in the module, candidates should formulate a detailed plan
encompassing customer discovery, validation, creation, and company building
stages. Consideration should be given to the unique challenges posed by the
pandemic and the evolving needs and behaviours of customers in the travel
industry. A good answer would demonstrate a solid understanding of the
customer development process and its application in a real-world scenario. It
would outline a clear strategy for identifying target customers, validating
hypotheses regarding their needs and willingness to purchase, and implementing
effective sales and marketing tactics. An excellent answer would go beyond the
basics to propose innovative approaches tailored to the specific challenges faced
by the travel insurance startup. It would incorporate thorough market research,
creative problem-solving, and a nuanced understanding of customer behaviour
to devise a comprehensive and actionable sales strategy. Additionally, it would
consider long-term sustainability and scalability, outlining steps for company
growth beyond immediate sales recovery.

b) Candidates are required to discuss the customer development process

implemented to facilitate revenue growth for the startup, now poised for scaling.
Emphasising the significance of pivots within this process, candidates should
elucidate the rationale behind incorporating pivots and propose a suitable
number based on theoretical frameworks and practical considerations. Drawing
from the principles outlined in the module, candidates should provide a detailed
analysis of how the customer development process was structured and executed,
highlighting key stages such as customer discovery, validation, creation, and
company building. A good answer would demonstrate a thorough understanding
of the customer development process, explaining each stage with clarity and
coherence. It would provide sound reasoning for the inclusion of pivots,
considering factors such as market dynamics, customer feedback, and iteration
cycles. Additionally, it would propose a reasonable number of pivots based on
the startup's industry, target market, and growth objectives. An excellent answer
would offer deeper insights into the nuances of the customer development
process, showcasing critical thinking and strategic acumen. It would justify the
chosen number of pivots with nuanced analysis, integrating theoretical
frameworks and real-world examples to support the argument. Moreover, it would
anticipate potential challenges and propose contingency plans for adapting the
customer development strategy as the startup scales.

Question 9
a) You have been hired as a start-up consultant by a B2C start-up that has
developed a new car sharing app. The start-up has scaled up successfully

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MN3194 Entrepreneurship

and is now looking to go after the B2B market. You are tasked to revamp
the business development strategy. Which business models would you
suggest pursuing and why?
b) Your strategy has been successful and now you are tasked to short list
potential venture capital firms for fundraising. Name three key factors
(apart from the cash injection) you deem to be important and explain.

Reading for this question

The material for this question is outlined in Chapters 13, 14, and 15 of the subject
guide.
Approaching the question
a) Candidates are presented with a scenario wherein a B2C startup has
successfully scaled up and is now seeking to enter the B2B market. The task
involves devising a revamped business development strategy tailored to this new
target market. Candidates are expected to propose suitable business models for
penetrating the B2B sector and provide reasoned justifications for their
recommendations. A good answer would identify and discuss relevant business
models suitable for B2B expansion, such as subscription-based services,
enterprise licensing, or value-added reselling. Candidates should demonstrate
an understanding of the unique dynamics and requirements of the B2B market,
aligning their suggestions with the startup's capabilities and objectives. An
excellent answer would not only propose viable business models but also
critically evaluate their suitability in the context of the startup's specific industry,
competitive landscape, and target clientele. It would consider factors such as
scalability, revenue potential, and alignment with the startup's core
competencies. Moreover, it would explore potential challenges and risks
associated with each proposed model and offer strategic recommendations for
mitigating them. Additionally, an excellent answer would provide examples or
case studies to support and illustrate the feasibility and effectiveness of the
suggested business models.

b) Candidates are presented with a scenario where their previous strategy has
proven successful, and they are now tasked with shortlisting potential venture
capital firms for fundraising. The question requires candidates to identify and
elucidate three critical factors, besides the cash injection, that they consider
important when evaluating venture capital firms. A good answer would identify
key factors such as industry expertise, network and connections, and alignment
of goals and vision. Candidates should explain how these factors contribute to
the success of the startup beyond the financial investment, highlighting the
importance of strategic partnerships, mentorship, and access to valuable
resources and opportunities. An excellent answer would not only identify the
factors but also provide detailed insights into each aspect, drawing on examples
or case studies to illustrate their significance. It would delve into the specific value
proposition that each factor offers and discuss how it can positively impact the
startup's growth trajectory. Additionally, an excellent answer would demonstrate
a nuanced understanding of the venture capital landscape, considering factors
such as reputation, track record, and cultural fit when shortlisting potential firms.

Question 10
a) The startup is now looking to raise venture capital. The pre-money
valuation is $40,000,000 with two co-founders holding 30% of the shares
each and two investors holding 20% each. Now, the platform receives a
venture capital injection of $20,000,000. Answer the following questions:

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 Examiners’ commentaries 2023

i. What is the post-money valuation in $?

ii. How much equity holds each founder in % and $ after the capital
injection?
iii. How much equity holds the venture capital firm in % and $ after the
capital injection?

b) How would you compose the new advisory board and what skills would you
look out for in this particular case. Discuss five different advisory board
member roles.

Reading for this question

The material for this question is outlined in Chapter 15 of the subject guide.
Approaching the question
a) Post-money valuation:

i. The post-money valuation is indeed the sum of the pre-money valuation and
the venture capital injection. Therefore, it is $40,000,000 (pre-money
valuation) + $20,000,000 (venture capital injection) = $60,000,000.

ii. Equity held by each founder after the capital injection:

In the post-money scenario, each founder's equity percentage decreases

because the venture capital injection dilutes their ownership. The correct
calculation for each founder's equity percentage after the injection is:

Founder A: $12,000,000 (initial value) / $60,000,000 (post-money valuation)

= 20%

Founder B: $12,000,000 (initial value) / $60,000,000 (post-money valuation)

= 20%

So, each founder holds 20% of the shares after the capital injection.

iii. Equity held by the venture capital firm after the capital injection:
The correct calculation for the venture capital firm's equity percentage after
the injection is:

Investment firm: $20,000,000 (investment amount) / $60,000,000 (post-

money valuation) = 33.33%

b) The candidates, in light of the startup's growth trajectory and impending venture
capital injection, are tasked with structuring a new advisory board. Their approach
to composing this board should be strategic, considering the startup's specific
needs and growth stage. Requisite skill sets for advisory board members include
industry expertise, financial acumen, networking capabilities, and strategic
planning proficiency. Expounding upon five distinct roles for advisory board
members in this context, candidates should propose industry specialists to
provide sector-specific insights, financial advisors to offer guidance on fiscal
matters, marketing strategists to assist in brand development and market
positioning, legal counsels to navigate regulatory frameworks, and technology
experts to advise on product development and innovation. A good response
would articulate how each role contributes to guiding the startup through its
expansion phase, demonstrating an understanding of advisory board dynamics.
An excellent answer would provide detailed rationales for each role, aligning them

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MN3194 Entrepreneurship

with the startup's objectives and challenges, and propose specific individuals or
profiles for each role, showcasing their potential contributions and track record.

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