Tech Start UP Day- 'growing pains ?'

1. Tech Start UP Day- 'growing pains ?' Prof. Hans Crijns, Vlerick partner

2. In the e.U. • New companiesrepresent the most important source of new employment: they create more than 4 million new jobs every year in Europe. • Moreover, when new enterprises are founded, they grow more slowly8 in the EU than in the USA or emerging countries

3. “Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must run faster than the slowest gazelle or it will starve to death. It doesn’t matter whether you are a lion or a gazelle. When the sun comes up, you better start running”. - Thomas L. Friedman (in “The World Is Flat”)-

4. $ EBIT 3 EBIT 2 Time “DEATH VALLEY” Upcoming growth “Start and seed” Growth : How ? When ? Who ? EBIT 1

5. When ? entrepreneurial process Personal Entrepreneur Leader Manager Commitment Vision Organizational Team Strategy Structure Culture Products Personal Achievement Locus of control Ambiguity tolerance Risk taking Personal values Education Experience Personal Risk taking Job dissatisfaction Job loss Education Age Commitment Sociological Networks Teams Parents Family Role models Innovation Triggering event Growth Implementation Environment Opportunities Role models Creativity Environment Competition Resources Incubator Government policy Environment Competitors Customers Suppliers Investors Bankers Lawyers Resources Government policy Source: Based on Carol Moore’s model, presented in “Understanding Entrepreneurial Behavior”.

6. The Entrepreneur : Who ? Valueoriented Life style Static Status Quo Local Limited Internal resources Self employed Defends against competition Risk Averse Survival Growing Vision opportunistic Global Expanding External resources Professional team Seeks competition Risk taking and sharing Success Source: EFER, Europe’s 500

7. Failure and growth Overall in EU – start-ups : • +/- 30 % start ups disappear after 1 year • > 50 % start ups leave the stage within 5 year period • +/- 10 % is a “gazelle” (1 % a real)

8. Growing companies Financial profile Growing co’s (gazelles) vs non growing co’s • produce higher added value per capita (more productive, • but employ personnel with a higher cost per capita, • are clearly more profitable in all aspects, • have more debt financing, • have a lower liquidity • and have a higher risk, have a higher chance for failure MT

9. The never ending game? OPPORTUNITY TEAM RESOURCES AG - The Entrepreneurial Manager

10. GrowingPains ? • The unexpected • Operations • Customersetc… • “Deathvalley” • WorkingCapital • “A plan” with a “B team” • “Management experience”

11. Causes of failures • Causes due to personal characteristics of the management. • Mistakes concerning management (61%) • Indirect causes (6%): • Death of the entrepreneur • Team/family problems • Causes due to financial structure of the company (25%) • Exceptional exogenous causes (9%)

12. GrowingPains ? • Recognizing Growing Pains and Assessing the Need for Change • Structuring ? Strategic Planning/Business model/ Organizational Structure/ Management and Leadership/ Organizational Control/ Performance Management/Corporate Culture • Financing growth ? Cash management/working capital needs/Bank loans vs Equity (risk capital) • Close to the customers / …market/ competitors/suppliers/…

13. Entrepreneurship and management MANAGEMENT ENTREPRENEURSHIP Co-ordination of old resources/on- going activity Initial discovery Opportunity refinement Market making Resource acquisition (New) co- ordination of (new) resources Discovery process Exploitation process

14. “FIRST THERE WAS ENTREPRENEURSHIP, THEN CAME MANAGEMENT” “NOTHING CAN START WITHOUT VISION AND ENTHOUSIASM, NOTHING CAN LAST WITHOUT SYSTEMS AND METHODS”