As Ciesla points out in the final paragraph, raising funds forbusiness projects is not as simple as it may first seem to be. Ittakes longer than expected and may consume more efforts than thepre-planned. It is the foundation of a ‘big thing’. This paperprovides a comprehensive discussion on four main issues. One suchissue is whether or not Craig and Micah should have solicited forfunds from friends and family before seeking them from other sources.In the first part, the risks involved in raising money from suchindividuals have, as well, been discussed. The second part provides adiscussion of the risks and benefits of waiting for patents beforerequesting customer feedback. In the third part, the extent to whichthe idea to give up equity was good or bad has been discussed.Details regarding Ciesla and Yairi’s decision to stuck it out evenwith such bad lack have been provided in the fourth part.
Borrowing from friends and family should have been the firstalternative. They should have done it before seeking funds from othersources. In spite of the many risks involved and the high likelihoodthat the relationship may be destroyed, the risk involved inborrowing from external sources cannot be contemplated. It isimportant to note that, in the beginning, Ciesla and Yairi areborrowing funds to implement a non-patented intellectual property. Assuch, the risk that their idea may be stolen when they keep sharingit to external sources remains considerably high. The risk that thesame idea may be stolen by family members and friends remainsrelatively low (Drucker, 2014). Ciesla and Yairi should, therefore,have borrowed from family and friends first. Despite therecommendation that the two partners should have borrowed funds fromfriends and family first, they would be required to be ready to putup with various risks (Abrams, 2012). The biggest risk is loss ofsuch friends and family members as well as strained relationshipswith them. By borrowing from friends and family, the two partnersalso attract awkwardness in their social lives. There is also therisk that the loan shall be treated informally. The partners may beconvinced that there it is not important to document loans fromfriends and family. This may lead to adverse repercussions in thenear future.
By waiting until they had been granted patents so that they could askfor customer feedback, Ciesla and Yairi exposed themselves to variousrisks and benefits. One of the main risks was the risk for inadequatetime to commence the project’s execution. Customer feedback is animportant consideration that dictates the commencement of the projectto a considerable extent. Without the feedback, the two partnerslacked important details. Ciesla and Yairi could not even make areasonable estimate of the product’s demand. The risk of patentinga less desirable intellectual property remained high. Patentingrequires resources. Patenting an intellectual property that haslittle or no demand is, therefore, a loss.
Delayed request for customer feedback came along with severalbenefits. One such benefit is the reduced risk of theft ofintellectual property. Customers were yet to be informed about theproduct until the patents were granted (Abrams, 2012). Besides, thetwo partners could have used the open idea (non-patented) whennegotiating for better deals by convincing the investors that thepatent could be registered under their name. An additional benefit isthe fact that they enjoyed the monopoly of knowledge since they wereyet to share the ‘how to’ of their idea with other parties.Besides, the startup costs were maintained at a reasonable minimum.
The idea to give up equity to get the help they needed was goodbecause it enabled them to obtain help where other means could nothave worked. Besides, the two partners did not have to give up alarge amount of equity to start up. However, it has severaldrawbacks. One such limitation is that the new owners provideplatforms for intermediaries thereby increasing the risk for hacking.Most of them are not aware of the hustles that Ciesla and Yairi wentthrough when coming up with the idea. As such, the depth of a ‘pinch’may not have an impact that is as large to them as it would be forthe original owners. Besides, the fact that the firm is a simplestartup may have compelled the two partners to sell the securities atcheap and highly discounted prices (Drucker, 2014). This reducesfuture benefits. The majority of investors are afraid to invest instartups. To woe, them to Tactus Technologies, Ciesla and Yairi musthave been compelled to lower the cost of stocks to a considerableextent. Due to the fact that many business startups that opt forequity financing woe less sophisticated investors, the Security andExchanging commissions in the different countries require that strictfinancial reporting rules are followed. As such, equity financingcomplicates financial reporting procedures for startups.
Ciesla and Yairi stuck it out even with bad lack because they werebeing driven by their vision and they had the passion and the driveto work towards it. They were persistent enough. They understood thatthey were bound to make mistakes and that the environment may not befriendly at some point. Any sign of failure signaled an opportunityfor them to learn as opposed to giving up. The two partners seem tohave learnt and understood the art of entrepreneurship (Wang &Edward, 2016). They must have learnt that giving up early could onlyhave denied them another opportunity the opportunity to learn fromtheir mistakes.
To be persistence, I would require a positive attitude towards theactivity that I am persistent on. Negative attitude could only dobetter in alleviating persistence. It would also be important for meto deal with the fear of the unknown and to overcome it. With thefear, chances are high that I would remain less persistent.Confidence would also be paramount in such an endeavor.
Inescapably, borrowing from friends has both positive and negativerepercussions. Ceisla and Yairi had the opportunity to compare them.The decision made should be dependent on the consequences. The delayby the two partners, to ask for customer feedback before patenting,was strategic. It reduced the risk of theft of intellectual propertyincluding other benefits. However, Ceisla and Yairi propelled therisk that an unpopular product would be patented (Abrams, 2012). Theidea to give up equity for help seems to have had more drawbacks thanbenefits. In spite of the many mistakes, the two partners stuck itout. They seem to have learnt the art of persistence and its benefitsin entrepreneurship.
Abrams, R. M. (2012). En-tre-pre-neur-ship: A real-world approach: hands-on guide for today`s entrepreneur. Palo Alto, CA:Planning Shop.
Drucker, P. (2014). Innovation and entrepreneurship.Routledge.
Wang, H., Liu, Y., & Edward E. P. (2016). Entrepreneurship andtalent management from a global perspective: Global returnees.Northampton, Mass: Edward Elgar Pub.