Breaking Out or Breaking Through Wealth Building through Entrepreneurship

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Breaking Out or Breaking Through Wealth Building
through Entrepreneurship

• Jeffrey Robinson, Ph.D.
• NYU-Stern School of Business

2005 NSBE National Convention Boston,
Massachusetts March, 2005
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Agenda

• Opportunities in Entrepreneurship
• Becoming an Entrepreneur
• 3 Myths
• 1 Truth
• Supporting Entrepreneurs
• The Rest of the Story

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Opportunities for Entrepreneurship

• Traditional Entrepreneurship
• Social Entrepreneurship
• Community and Economic Development
• Franchises
• Corporate Venture Capital
• Private Equities
• Venture Capital

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Traditional Entrepreneurship

• Earl G. Graves, Black Enterprise Unlimited
• Robert Johnson, BET
• Oprah Winfrey, Harpo
• Cheryl Mayberry McKissack, Nia Enterprises
• Randal Pinkett, Ph.D. BCT Partners
• Melanie Mosley, Light Dynamics
• Winslow Sargent, Ph.D., XCelis

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Types of Ventures

• Life Style Business less than 1 M in revenues
• (forged out of your passion)
• Growth Business between 1 M and 20 M

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Social EntrepreneurshipCommunity Economic
Development

• Charter/Contract/New Schools
• Edison Schools
• Social Service/ Social Action
• One Economy
• Poverty Solutions
• Underserved/Underrepresented
• CitySoft
• CityFresh Foods
• Economic Development
• Greyston Foundation (Greyston Bakery)

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Capital Side

• Corporate Venture Capital
• Private Equities
• Venture Capital
• Carthage Ventures

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Becoming an Entrepreneur

• Demystifying the Myths

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Myth 1I need lots of money.
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How Much Money They Had
In terms of start-up capital, including personal
assets, Inc. 500 companies started with little.
23 (B)
14 (G)
13 (A)
13 (D)
13 (F)
12 (E)
12 (C)

• (A) Less than 1,000 (E) 50,001 to 100,000

(B) 1,000 to 10,000 (F) 100,001 to 300,000
(C) 10,001 to 20,000 (G) More than 300,000
(D) 20,001 to 50,000
Start-up capital refers to funds raised before
any product or service was delivered. Personal
assets includes savings, mortgage or other
personal loans, credit cards, 401(k), etc.
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Where the Money Came From
The following sources of funds provided Inc. 500
start-up capital.
2 (G)
4 (F)
2 (H)
4 (E)
8 (D)
SOURCE OF FUNDS
53 (A)
10 (C)
17 (B)
(A) Personal assets
(B) Other founders personal assets
(C) Assets of family or friends (other than
co-founders)
(D) Commercial bank loan or line of credit
(E) Private equity investment
(F) Financing from a supplier, customer, or
other business entity
(G) SBA loan or funds from other government
program
(H) Formal venture capital
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Executive Compensation
CEOs taking home only five figures are in the
small minority. Heres a salary guide.
9 (D)
40 (A)
22 (C)
SALARY
28 (B)

• More than 500,000
• 100,001 to 250,000
• 250,001 to 500,000
• (D) Less than 100,000

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Since Start-up

• 12

of companies have raised venture capital.
of companies have raised private equity.
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Myth 2I am destined to fail.(a.k.a The
Odds Are Against Me!
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Survivor
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Myth 3All the good ideas are gone.
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The Opportunities are Here

• Untapped Markets
• Underserved Markets
• Underdeveloped Markets
• Unique Perspectives

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Examples

• Dogloo
• Dell
• TV One
• BCT Partners
• Ashley Stewart
• Altitunes/Laptop Lane/WayPort
• ZipCar
• FUBU/Sean Jean/Phat Farm
• Nia Enterprises

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3 Myths, 1 Truth

• Myths
• I have to have lots of money.
• I am destined to failed.
• All the good ideas are gone.
• Truth
• I can build wealth through entrepreneurship!

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Truth 1I can build wealth through
entrepreneurship.

• Wealth Building
• Fortune Magazine - 40 under 40
• 7 out of 10 millionaires are self employed
• Fortune Study
• 69 of top 1 of wealth are entrepreneurs (1998)

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What can you do now to prepare?

• Write a business plan
• Enter business plan competitions
• Make contacts while you are in school or with
  local business schools
• Volunteer to work with minority small business
  owners and entrepreneurs
• Dont give up on your dream!

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Breaking Through or Breaking Out to .
Entrepreneurship

• What are my options?

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4

• Become a Second Job Entrepreneur
• Become an advisor or consultant to some
  entrepreneurs
• Become an investor
• Become a full-time entrepreneur

Options
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Second Job Entrepreneurs

• 2 3 million people are doing this
• Pro Low risk, low or no capital required
• Con Can you do two things well at the same time

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Investing in Small Business

• Private Equity Markets
• Angel Investor Groups
• Bridge capital
• Venture Capital
• Consider investing in industries and ideas you
  understand or know a significant amount about

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Support Strategies

• Patronize and encourage the use of small minority
  owned business
• Sit on advisory boards and boards of directors of
  social ventures and start-ups
• Consult with minority entrepreneurs (leverage
  your MBA and your experience).

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Contact information

• Jeffrey A. Robinson, Ph.D.
• jrobinson_at_stern.nyu.edu
• www.jeffreyrobinsonphd.com
• www.bctpartners.com
• African American Women Entrepreneurs Research
  Project
• The Ph.D. Project Ph.D. in Business School
• Venture Plan Document