Entrepreneurial Finance Problem Set

Ramana  Nanda; William A. Sahlman; Robert  White

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Exercise | August 2016 (Revised August 2020)

Entrepreneurial Finance Problem Set

by Ramana Nanda, William A. Sahlman and Robert White

Language: English

Format: Print

11 pages

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Citation:

Nanda, Ramana, William A. Sahlman, and Robert White. "Entrepreneurial Finance Problem Set." Harvard Business School Exercise 817-037, August 2016. (Revised August 2020.)

About the Authors

Ramana Nanda

Sarofim-Rock Professor of Business Administration (Leave of Absence)

Entrepreneurial Management

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William A. Sahlman

Baker Foundation Professor, Dimitri V. D'Arbeloff - MBA Class of 1955 Professor of Business Administration, Emeritus

Entrepreneurial Management

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View Publications »

Robert F. White

MBA Class of 1957 Senior Lecturer of Business Administration

Entrepreneurial Management

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Working Paper | HBS Working Paper Series | 2020

Biased Sampling of Early Users and the Direction of Startup Innovation

Ruiqing Cao, Rembrand Koning and Ramana Nanda

Using data from a prominent online platform for launching new digital products, we document that the composition of the platform's ‘beta testers’ on the day a new product is launched has a systematic and persistent impact on the venture's success. Specifically, we use word embedding methods to classify products launched on this platform as more or less focused on the needs of female customers, and show that female-focused products launched on a typical day—when nine-in-ten users on the platform are men—experience up to 40% less growth a year after launch. By isolating variation in the composition of beta testers that is unrelated to the characteristics of launched products, we further show that a startup's user growth and success with VC financing can be traced to variation in the number of female beta-testers on the platform the day its product is launched. Overall, our findings suggest that the composition of early users can create systematic bias in signals of a startup's market potential, with consequential real effects—including a dearth of innovations aimed at consumers who are underrepresented among early users.

Citation:
Cao, Ruiqing, Rembrand Koning, and Ramana Nanda. "Biased Sampling of Early Users and the Direction of Startup Innovation." Harvard Business School Working Paper, No. 21-059, November 2020. View Details

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Case | HBS Case Collection | October 2016 (Revised November 2020)

Bootstrapping at Lightricks

Robert White, Jeffrey J. Bussgang and Christine Snively

By August 2015, two-year-old mobile imaging software startup Lightricks had developed and released two best-selling paid mobile apps, grown to a team of 30, earned a revenue run rate of nearly $10 million, and achieved modest profitability. The bootstrapped company had explored raising funds, met with venture capital firms, and was presented with a term sheet. The cofounders believed the financing would allow them to scale up quicker, but they also worried about losing control of their company.

Keywords: technology; internet; Business Startup; mobile technology; hardware; Online Advertising; Mobile Technology; Business Startups; Online Advertising; Technology Industry; Israel;

Citation:
White, Robert, Jeffrey J. Bussgang, and Christine Snively. "Bootstrapping at Lightricks." Harvard Business School Case 817-051, October 2016. (Revised November 2020.) View Details

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Case | HBS Case Collection | November 2020

Guild Education: Unlocking Opportunity for America's Workforce

William A. Sahlman, Michael D. Smith, Nicole Tempest Keller and Alpana Thapar

Founded in 2015, Guild Education is an education marketplace that connects employers and universities to provide employees with ‘education as a benefit.’ The Denver-based company is transforming traditional tuition assistance programs by facilitating direct payment by the employer to the academic institution and by supporting students with coaching and advising. By October 2020, Guild had gained market traction and demonstrated impressive results. Rachel Carlson, CEO and cofounder of Guild, must decide how to manage the company’s future growth. She believes there is great potential within its core education marketplace to expand the network of academic institutions and portfolio of company partners. Carlson also envisions extending the business model and entering the career placement market. To successfully do that, she needs to find the same incentive alignment in these new businesses as in Guild’s core education platform. Would it be possible to find a solution that would result in a win-win outcome for all?

Keywords: Education; Market Platforms; Technology; Employees; Social Enterprise; Education Industry; Technology Industry; Colorado;

Citation:
Sahlman, William A., Michael D. Smith, Nicole Tempest Keller, and Alpana Thapar. "Guild Education: Unlocking Opportunity for America's Workforce." Harvard Business School Case 821-050, November 2020. View Details

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Entrepreneurial Finance Problem Set

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