David Kirkpatrick

June 2, 2009

Capital not key to ventures

Interesting business research on start-up capital and business success.

The release:

Study: Lack of capital not a ‘death sentence’ for start-ups

A new study from North Carolina State University is turning the conventional wisdom about technology start-up companies on its head, showing that ventures with moderate levels of undercapitalization can still be successful and that a great management team is not more important than a top-notch technology product when it comes to securing sufficient amounts of capital.

“Our research shows that undercapitalization is not a death sentence for start-up ventures,” says Dr. David Townsend, an assistant professor of management, innovation and entrepreneurship at NC State who co-authored the study. “There are things a venture can do to survive and succeed.” Basically, Townsend says, start-ups that fall short of their fund-raising goals can take steps to minimize their cash outflows in order to stay viable.

Undercapitalized ventures “need to engage in management strategies focused on reducing their costs. For example, outsourcing certain development tasks and accounting responsibilities or exchanging services with other companies – saying we’ll build your Web site in exchange for a year’s worth of accounting services, etc.,” Townsend says.

The study also found that there is little evidence to support the long-standing tenet that a great management team is the most important part of a venture company when it comes to securing investment in a start-up. The study shows that a venture with an “A,” or top notch, management team and an A technology is likely to meet its capitalization goal. But the researchers were surprised to find that the combination of a “B,” or less than ideal, management team with a B technology was also quite successful in meeting capitalization goals. Ventures that had an A management team but a B technology, or vice versa, were usually underfunded.

Townsend explains that B management teams with B technologies are probably more successful at meeting their capitalization goals because they are aware of their shortcomings, and modify their capitalization targets accordingly. For example, these B teams may minimize management salaries or restrict their marketing budgets.

Similarly, Townsend says the evidence implies that A management teams with B technologies, or vice versa, often fall short of their capitalization targets because they have not modified their fund-raising goals – and as a result investors don’t buy in at a sufficient level to fully fund the venture’s intended strategies.

 

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The study, “Resource Complementarities, Trade-Offs, and Undercapitalization in Technology-Based Ventures: An Empirical Analysis,” was co-authored by Townsend and Dr. Lowell W. Busenitz of the University of Oklahoma. The study will be presented June 5 at the Babson College Entrepreneurship Research Conference in Boston and at the Brown International Advanced Research Institutes in Providence, R.I., on June 18.

The research was supported by North Carolina State University, The University of Oklahoma, and i2E – a non-profit corporation focused on wealth creation by growing the technology-based entrepreneurial economy in Oklahoma.

April 2, 2008

Nanotech news in computing, display and medicine

The latest in nanotechnology developments from KurzweilAI.net.

First up is a variant of multidimensional hypercubes to be used as part of nanocomputers.

Next is an active-matrix display created with nanowires. This tech should eventually lead to e-paper, flexible monitors and other cool display applications.

Last is a nanomachine that kills cancer cells. UCLA researchers created a “nanoimpeller” that delivers anti-cancer drugs right to the cancer cell.

Hypercubes Could Be Building Blocks of Nanocomputers
PhysOrg.com, April 1, 2008University of Oklahoma researchers have investigated a new variant of multidimensional hypercubes as computational elements of nanocomputers: the “M-hypercube,” which could provide a higher-dimensional layout to support three-dimensional integrated circuits and the quantum properties of nanocomputers.The unique structure of hypercubes provides a massively parallel, distributed processing architecture with simple, robust communication linkages, able to count single electrons, and allow for parallel computing, reversibility, locality, and a three-dimensional architecture.

M-hypercubes contain two types of nodes: state nodes, which are embedded on the vertices of the M-hypercubes; and transmission nodes, which are embedded in the middle of the links between state nodes. Each node can be turned on or off; the transmission nodes can isolate parts of the cube from other parts when in the off state.

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Engineers make first ‘active matrix’ display using nanowires
PhysOrg.com, March 31, 2008Purdue University researchers have created the first active-matrix display using a new class of transparent nanowire transistors and circuits.Future applications include e-paper, flexible color monitors, and heads-up displays embedded in car windshields.
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Nanomachine kills cancer cells
PhysOrg.com, April 1, 2008UCLA researchers have developed a “nanoimpeller” nanomachine that stores anticancer drugs inside pores and then releases them into cancer cells in response to light.They claim it’s the first light-powered nanomachine that operates inside a living cell.

The interior of the pores are coated with azobenzene, a chemical that oscillates between two different shapes upon light exposure. The amount of drug released can be precisely controlled by the light‘s intensity, excitation time and specific wavelength.
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