industry life cycle Flashcards
What does ‘technology-based’ mean in the context of a venture?
A venture that is either a new technology developer or a new technology user
This definition highlights the dual role technology plays in business ventures.
Who can receive capital infusions from formal VC investors?
Only legal entities incorporated in the due forms
Individual entrepreneurs cannot directly receive capital from formal VC investors.
What stage is also called the Pre-competitive stage?
Development stage
In this stage, there is no revenue generation yet, only operating costs to develop the product/service.
What does economic BEP mean?
Revenues cover the operating costs; operating income is >= 0
This is an accounting measure that indicates the venture’s financial health.
What are the key goals during the Scale-up stage?
Ability to reach financial BEP; cash flow from operations is >= 0
This stage marks the transition to more mature operations.
What does transaction refer to in the context of M&A?
A deal when the target company is private
M&A stands for mergers and acquisitions.
What does cumulated cash flow (FCF∑) measure?
The net financial position of the venture
A negative FCF∑ indicates the need to raise outside capital.
What characterizes the transition stage in terms of uncertainty and risk?
Turning point from uncertainty to risk; tech scenario consolidates, economic forecasts become feasible
This transition is crucial for New Technology Based Firms (NTBF).
Define the ‘Fluid’ stage in the technology life cycle.
An infant technology that has yet to show its usefulness in developing economic activity
This stage represents early-stage technologies.
What is indicated by survival revenue?
Often marked at the first $1,000,000 of sales
This figure varies and should not be universally applied.
What is the financial BEP?
FCF >= 0
This indicates that the venture’s cash flow is positive.
What is necessary to support revenue growth?
Financial capital to support investment programs and cover operating losses
This is essential at the beginning of the business life cycle.
True or False: Generalist investors rely solely on future forecasts for investment decisions.
False
They primarily base their decisions on historical data and economic measures.
Fill in the blank: The _______ stage is characterized by operating costs without revenue generation.
Development
This stage is also referred to as the Pre-competitive stage.
What typically happens to business risk as the business vintage and stage of technology evolution increase?
Lower amount of risk
This highlights the distinction between uncertainty (not measurable) and risk (measurable).
What is the relationship between investment expenditure and revenue growth?
There is no revenue growth without prior investment expenditure
This underscores the importance of upfront investment in business development.
