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9-1Chapter 9Building a New Venture TeamEntrepreneurship: Successfully Launching New Ventures, 2/eBruce R. BarringerR. Duane IrelandCase Study BrainyBunchFounded in 2008 - a pioneer in International Islamic Montessori - focus: Montessori and English. Started in Kajang - HQ in Shah Alam 9-2

In 2013, 58 Brainy Bunch campuses across Malaysia and started operations in India and Singapore.

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Talent for drawing attention and networking: Business leadersMediaGovernment agenciesCollege - Early childhood graduatesChemistry shared vision, mission and values

9-61. New Venture TeamGroup of founders, key employees, and advisers - move a new venture - an idea to a fully functioning company. Doesnt come together all at once. Built as new venture progressesKey employees hired once critically needed - afford 9-7Involves more than founders and paid employees.E.g. boards of directors, boards of advisers, consultants and professionals for direction and advice.9-8

Liability NewnessNew ventures - a high propensity to fail.Business model is not tested9-9

Why?Researchers findings - the fact that companies - hiccups3 reasons:Cant adjust quickly enough to new roles - not an expertLacks a track record with outsidersOverlooked things9-10How to Overcome?Assembling a talented and experienced new venture team - one path to overcome these limitations.Team of experts proven track recordsBased on merit NOT relationship9-112. Separate Elements of a New Venture Team9-12

a. Founder or FoundersCharacteristics of the founder or founders - early stage - a significant impact new venture takes shape.Why vision / address?9-13

Two important issues: Size and qualityi. SizeStudies have shown that 50% to 70% of new ventures are started by > 1 individual.Started by a team rather than a single individual have an advantage.9-149-15HeterogeneousHomogenousDiverse in experience and skillSimilar in experience and skillMore creativeLess creativeConflict is very likelyConflict is less likelyHas more potentialHas less potentialE.g. Marketing and Electrical Engineer

E.g. Accountant and Administratorii. QualitySeveral factors are thought to be significant to a founders success.Higher education.Prior entrepreneurial experience.Relevant industry experience.The ability to network effectively.***Principle Ethical Values9-169-17Preferred Attributes of Founder or Founders

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b. Recruiting and Selecting Key EmployeesStart-ups vary - how critically to add personnel.Founders work alone or employees are hired immediately.Founders draw upon - network of contacts to identify candidates for key positions or go through placement offices at college or university or rely on executive search companies.9-19c. Board of DirectorsIf a new venture - a corporation (private limited Sdn Bhd) - legally required to have a board of directors.A panel of individuals - elected by a companys shareholders to oversee the management of the company.9-20Roles of BoDA board - made up of both inside directors and outside directors.An inside director company director / key officer of the company.E.g. CEO / GMAn outside director someone not employed E.g. Non-Executive Director / Board Member9-21THREE Formal ResponsibilitiesAppoint key officers.Declare dividends / bonus.Oversee the company affairs.9-22Frequency of Meetings and CompensationMost meet three to four times a year.New ventures - more likely to pay their boards Company stockAsk them to serve on a voluntary basis Pay a cash honorarium. 9-239-24FunctionImportance of FunctionProvide GuidanceLend LegitimacyTWO MAIN Ways a BoD Can Help a New Venture Get Off to a Good StartMost useful role is to provide guidance and support to companys managers. Many founders and CEOs interact with board members frequently and obtain important input and advice.To lend legitimacy to a company. Well-known and respected board members bring instant credibility to a company. Attributes of Effective BoD (Group)Regular and clear communication with the CEOCustomer-focused point of viewComplementary mix of talentsStrong ethicsCollective decision9-25Attributes of Effective BoM (Individual)Strong personal and professional networksRespected in their fieldStrong interpersonal communication skillsAbility and willingness to mentor the CEO and top managersPrior experience in the industry9-26d. Rounding Out the Team: Role of Professional Advisors9-27Board of AdvisersLenders / InvestorsOther Professionalsi. Board of Advisers (BoA)A panel of experts - asked by a companys managers to provide counsel and advice on an ongoing basis.Unlike a board of directors, an advisory board possesses no legal responsibility for company - gives nonbinding advice.9-28Can be set up for general purposes - address a specific issue or need.Syariah, talent management, reward system, leadership, etc

9-29Many people are willing to serve on a companys BoA than BoD Requires less time.No potential legal liability involved.9-30Like the members of a BoD, members of a companys BoA provide guidance and lend credibility to the company.9-319-32Board of AdvisersNameProfessionRole on Advisory BoardTan Sri Dr. Rais YatimProf. Dato Dr. Tahir AzharChairman of IIUM Higher EducationChairman of IIUM HoldingsAdds credibility and provides the company advice on strategies and networkingAdds credibility and provides the company advice on thinking-out-of-box and practical solutionsGuidelines to appoint a Board of AdvisersDisillusioned if they dont play a meaningful role - companys development and growth.Should look for board members - compatible and complement one another vision, working values, experience, and expertise.9-33Important Note: When inviting people to serve on BoA - should carefully spell out rules in terms of access to confidential information.9-34SignalingWhen a high-quality individual does agree to serve on a board of a company - in essence, signaling - potential to be successful.Without a credible signal - difficult for potential customers, investors, or employeesto identify high quality start-ups.9-35ii. Lenders and InvestorsHave a vested interest in companies they finance - causing them to be very involved.Help new companies by providing guidance and lending advice.They assume the natural role of providing financial oversight.

9-369-37Beyond Financing and Funding: Ways Lenders and Investors Add ValueHelp identify and recruit key management personnelProvide insight into the industry and marketsHelp the venture fine-tune its business modelServe as a sounding board for practical ideasProvide introductions to additional sources of capitalServe on the new ventures board of directors or board of advisorsiii. Other ProfessionalsMake up a companys new venture team - vary by company.Solicitor, accountant, business consultant and business coach. 9-38Business ConsultantsAn individual who gives professional or expert advice.Two categories: paid consultants and consultants - available for free or at a reduced rate through a nonprofit of governmental agency.E.g. Consultant grant application, setting up a new branch abroad9-399-40A business coach is just like a sporting coach. A sporting coach pushes an athlete to achieve optimum performance, provides support when they are exhausted and teaches the athlete to execute plays that their competition does not anticipate.

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