Finance for Entrepreneurs: Block Chain, Instagram, and Case Study

This report delves into the realm of finance for entrepreneurs, exploring diverse aspects of raising capital and business strategies. It begins by analyzing the innovative approach of Bit Bounce in raising capital through ICOs and compares it to traditional IPOs, highlighting benefits and risks. The report then examines the Instagram pivot, detailing the company's evolution from Burbn and its alignment with the Lean Startup model, and explores the financing decisions of investors like Baseline Ventures and Andreessen Horowitz. Furthermore, the report discusses Instagram's exit strategy, including the decision variables and associated risks. Finally, it presents a case study on Instacart, outlining its business plan and operational model. The report aims to provide a comprehensive overview of financial strategies and business development for entrepreneurs, including blockchain, ICOs, Instagram, and case studies.

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Finance for Entrepreneurs

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Table of Contents
Introduction..........................................................................................................................4
Part 1 Block chain................................................................................................................5
Describe how Bit Bounce raised capital and explain what is innovative about this
approach.......................................................................................................................................5
Detail the benefits of this approach compared to an IPO................................................5
Identify all the risks in this financing approach...............................................................6
Summaries the SEC July 25 report..................................................................................6
Search and identify at least 10 different startups that are using block chain. Provide
their name, where they are based, what financing they may have received (if info available)
and a one sentence description (value proposition) about the business.......................................7
Part 2 Instagram and financiers...........................................................................................9
What was Instagram pivot? Describe the business before and after their pivot. What
was the name of the company before Instagram? Is this pivot consistent with the “Lean
Startup” model?...........................................................................................................................9
Before the pivot, investors including Baseline Ventures and Andreessen Horowitz
participated in financing of a $500,000 seed round. How many investments and exits has each
group had? Can you identify any cultural differences between the two groups?........................9
How did the owners of Instagram exit the business? Describe the decision variables
including pointing out the risks in this exit...............................................................................11
Part 3 Case study development..........................................................................................12
Conclusion.........................................................................................................................18
References:........................................................................................................................19

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Introduction
This report is about the finance for entrepreneurs. The report focus on the ways by which Bit
bounce raised capital for their business and mentions the benefits from it compared to an IPO.
The report will identify the risk in the financial approach. It also includes the Instagram pivot
and explains the business before and after pivot. In the end, the report entitles the start up plan
for a business and explains the all the small and every needed aspect which has to be followed by
the entrepreneurs. The report also mentions the lean canvas to understand the business fully and
overcomes the problems.

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Part 1 Block chain
Describe how Bit Bounce raised capital and explain what is innovative about this approach.
While raising a new round of equity fund for his company Bit Bounce, Stewart Dennis found
himself in circumstances where each entrepreneur would describe an enviable position. While
searching for the investor he met with Sequoia Capital and other top tier venture capital firms
and a prior investor, and then he met the billionaire Tim Draper who has shown interest and
ready to take part. He met several other people like Arthur and Kathleen Breitman who are the
creators of Tezos and there are successfully raised $232 billion before the launch of their new
blockchain network. While Dennis was raising fund for his crytocurrency-powered solution to
email spam he avoid Silicon Valley not including Draper and turned instead to the crowdfunding
method Tezos. The goal of Dennis is to raise $20 million by selling blockchain tokens over the
internet to an innumerable number of investors.
The approach of Stewart Dennis is innovative because he used ICO approach, rather take
investment from one investor he tries to raise fund from several investors by selling his
blockchain tokens (Owens, et. al., 2014).
Detail the benefits of this approach compared to an IPO.
ICO (initial coin offer) is a word that has recently achieved popularity in the cryptocurrency
atmosphere. The word is used to classify a procedure of raising investments for some specific
project. An ICO is repeatedly compared to an (IPO) initial public offering for stocks.
Nevertheless, there is lot of difference between both the terms.
Benefits of ICOs
The fact that ICOs are open to the public. It means anybody in the cryptocurrency industry can
take part if they can get finances transferred on time. With the ICO, the funds can be raised in a

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decentralized manner for the project. Moreover, the thought of cryptocurrency ICO means public
can help form the future of this complete ecosystem. There is a broad variety of different projects
raising funds through an ICO. Perhaps the biggest benefit is to speculators. Which is how the
tokens can be bought at a low price?
Identify all the risks in this financing approach.
There are various risks include in this financing approach, which are as follows:
No paperwork is required for getting an ICO. For a public security, it is important to have
paperwork just to be official and legitimate. The lack of authoritarian lapse concerns a few
market specialist and financial skill lawyers that can arise a question on the legality. However,
the SEC remains far away from any ICO inquiry, it is said to be taking a solid look at the bigger
use of such assistance, particularly with the expansion of ICOs surging in recent period. The
liquidity for the ICO in the market has been limited and it has mostly small. In spite of the
growing price of ICOs, the regulatory incalculability and be short of transparency generate
downsides for offers. With possible looming U.S. securities set of laws, companies’ effort to
instead register in overseas jurisdictions, most generally Singapore and Switzerland. However,
revelation in ICOs usually have been restricted whether in the U.S. or elsewhere (Owens, et. al.,
2014).
Summaries the SEC July 25 report.
Into this gold rush on July 25 came the Securities and Exchange Commission. In an inquiry, it
finds that the groups made it obvious that a few tokens are securities and will require registering
as such. The retail investors of America banned from partake in the ICOs for such tokens. If they
do not follow this rule than they will be doing violation of federal law. The SEC singled out the
DAO, a decentralized investment fund, which begins on the Ethereum network, as a bad actor.

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According to the SEC, DAO’s crowdsale in 2016 compose a sale of unregistered securities. “The
pipeline for ICOs just got a lot smaller,” said by Arnold Spencer, he is the general counsel for the
bitcoin ATM network Coinsource. Although the report of July 25 was not breaking any new
legal ground, he added it was a major turning point whereas some other investor treated the July
25 as a bombshell game changer (Owens, et. al., 2014).
.
Search and identify at least 10 different startups that are using block chain. Provide their
name, where they are based, what financing they may have received (if info available) and
a one sentence description (value proposition) about the business.
The 10 different startups that are using Blockchain are as follows:
1. Helloblock is based in San Francisco and it is bitcoin infrastructure built particularly for
developers.
2. BTC Jam is based in San Francisco and offers P2P lending platform that has provided
over $US5 million last year in bitcoin based loans.
3. BlockCypher is based in California and it is one of the first platforms as a service
infrastructure companies in bitcoin.
4. Digital Tangible Trust objectives to be a liquidity contributor and marketing partner for
hard assets.
5. Ripple Labs Company is building commercial applications and infrastructure around the
Ripple protocol. It is based in San Francisco.
6. Bifubao is a Beijing based company. It is not just another wallet provider. It is known as
Bitfoo globally.

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7. Coinbase is based in San Francisco. Company grows from small-hosted wallet company
in 2012 and becomes one of the largest companies in ecosystem.
8. BitPay is an Atlanta-based payment gateway, one of the first 3rd party merchant support
payment systems.
9. BitPagos is also in the merchant solution space but instead of converting bitcoin into fiat,
they are helping the mercantile to shift in the opposite way.
10. Kraken is a completely complaint digital asset trading podium that goes ahead of easy
market or bound instructions.

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Part 2 Instagram and financiers
What was Instagram pivot? Describe the business before and after their pivot. What was
the name of the company before Instagram? Is this pivot consistent with the “Lean
Startup” model?
After all the measurements, the new image sharing service, Instagram, is exploding. After the
launch of it, they had 100,000 users in week first, after a week, it was 200,000 and in third week
of its launch, they had 300,000 users. After that, they made the Apple’s app of the week in the
App Store. They are likely far past a half a million users already and it was not a bad initial
month. However, Instagram was not Instagram at all. Instagram was firstly known by the name
of Burbn. The co founder of Instagram Kevin Systrom and Mike Krieger choose to spotlight
their multi featured HTML5 check in project, Burbn, on mobile photography. Systrom said that
he and co founder Mike Krieger really give a year’s value of work into Burbn, lastly culminating
in the making of a entirely native iPhone app. However, it just was not very superior in their
opinion. Therefore, they throw the complete thing out and started over. Again, after a year of
work. The outcome, just 8 weeks later, that was Instagram. Yes, this pivot is according to the
lean startup because Instagram firstly known by the name of Burbn but it was fail in satisfying
their founder then they again work on it for a year and came with the successful launch and app
name is Instagram (Pennell, 2012).
Before the pivot, investors including Baseline Ventures and Andreessen Horowitz
participated in financing of a $500,000 seed round. How many investments and exits has
each group had? Can you identify any cultural differences between the two groups?
The development of Instagram was begun in San Francisco, when the founders of Instagram
focusing on their multi featured HTML5 check in project, Burbn. On five march 2010, Systrom

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closed a $500,000 seed-funding round with Baseline ventures and Andreessen Horowitz as
functioning on Burbn.
Systrom and Krieger jointly began functioning on a photo-sharing app four months later -- in
July 2010.
March 2010: Stanford University graduate Kevin Systrom closes a $500,000 seed round from
Baseline Ventures and Andreessen Horowitz as functioning on a location-based app known
Burbn.
July 2010: Systrom and Mike Krieger, who too studied at Stanford, start scheming an app for
sharing picture.
Kevin Systrom posted the initial photo to Instagram on July 16, 2010. The photo demonstrates a
dog in Mexico and foot of Systrom girlfriend's; the picture has been improved using Instagram
X-PRO2 filter.
October 2010: Krieger and Systrom launch the Instagram photo-sharing iPhone app with eighty
first users.
December 2010: Instagram publicize full picture support and sharing on Foursquare.
The app reaches 1 million registered users
In October Josh Riedel joined the company as Community Manager, Shayne Sweeney joined as
an engineer in November and Jessica Zollman joined the company in august 2011 as a
Community Evangelist (Bort, 2014).

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How did the owners of Instagram exit the business? Describe the decision variables
including pointing out the risks in this exit.
The team of Instagram just scored a huge $1 billion exit by selling it to Facebook in the year
2012. The lesson, which entrepreneurs can get from the CEO of Instagram, was Adapt and pivot
when your initial idea does not work out. The risk in their exit, at that point of time Instagram
had about a dozen of employees and over 30 million users. The exit of Instagram measured the
Unbelievable Exit of the Year. They were doing really well in the market and users was
increasing it might be possible that decision is taken for money purpose. Systrom was 28 only at
that time and earned himself $400 million in the deal (Siegler, 2010). When Facebook bought
Instagram, Facebook was doing really well with their business and on the way to becoming the
number one social networking site and Instagram was only a photo sharing app. Might be
possible that Systrom also has this thought in their mind while selling the Instagram.

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Part 3 Case study development
Summary of Business Plan
Business: The Company “Instacart” is an American based company, which deals in a same day
delivery service of grocery. Instacart provide facilities to their customer by delivering groceries
through personal shopper. A customer needs to choose personal shopper will deliver groceries by
a web application from various vendors and the selected items. In 2017, the company has
services and operations in the USA.
Apart from their website, customers can avail the service of Instacart primarily through a
smartphones app, accessible on Android and on IOS platforms. Customers have the facility to
pay the bill of groceries by using Apple Pay and Android Pay. Firstly, the customers of Instacart
have to go to the store and buy the items, which ordered at vendor, 10 to 20 percent added a
mark up for the delivery charges (Somerville, 2014). Now the business of Instacart has
developed and company is performing well in the market, and company has maintained their
relationships with the grocery stores that split their exiting markup, permitting the customers of
Instacart to buy at in store prices.
The former employee of Amazon, Apoorva Mehta started the Instacart. Organizations started
their services in Palo Alto, San Francisco and Mountain View. The valuation by the investors of
this startup company has $2 billion as of may 2015. The organization had about 200 workers in
April 2015. The investors of the company are Kleiner Perkins Caufield and Byers, Dragoneer
Investment Group, Valiant Group, Comcast Group, Thrive Capital, Angel Investor Martin
Romero, Khosla Ventures, Y Combinator, Andreessen Horowitz and Sequoia Capital. $275
million was the total funding in January 2015 (Emeç, et. al., 2016). Forbes named Instacart “the
most promising company in America”. Whole Foods Market Inc. Company did partnership with

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Instacart and invested in the company in 2016. Instacart announced in September 2016, to an
expansion in the North Chicago zone (Rougès, et. al., 2014). It was reported that in March 2017,
company raised a huge amount of new financial support round of $400 million dollars in new
venture capital that appreciated the grocery delivery service at roughly around $3.4 billion
dollars.
Financial Metrics
There are four important financial metrics, which helps in, evaluate a company:
 Liquidity on the balance sheet: The most important we look on the balance sheet is
liquidity in the form of cash. To evaluate this we have to take out the current ratio. It is a
measure of working capital. Essentially, it compares the current assets where they
determined the assets, which convert into cash in the next year, along with current
liabilities that are compulsion, which have to be paid in the next year. What a company
wants to look for evaluating their performance is a 2:1 ratio of liquidity to debt. Where
companies shows double the assets and single liability.
 Earnings growth and growth of net income on the Income Statement: The income
statement of a company includes some important key financial metrics. The most
important is growth of profit and the increase in the net income. What every entrepreneur
wants to see if business is growing.
 Return on Assets: it is important to look on return on assets that is using two of the
financial statements. Return on equity, return on capital and return on assets. These all
are evaluated what the incomes are accomplishing.
 Operating cash flow from the cash flow statement: The last metric is to see the cash flow
statement. Is the business bringing in real cash? Is the business generating cash by selling

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their products? What we have to look in the statement is operating cash flow in the
business (Zott, et. al., 2010).
Balance Sheet

Problem
High competition.
Substitute of
product
Competitive price
Unique Value
Proposition
Quality
Same day delivery
service
Accessibility: 24x7
Solution
Contract from sellers
on yearly basis
Market Penetration
Strategy
Key metrics
Customers
Sales
Profits
Unfair Advantage
NO
Channels
Home Delivery
Coupons
Customer
Segments
Solution for
homemaker having
problems to visit
store for grocery
Working persons
having no time to
go and shop for
such items.
Special discount for
old age people
(above 65 years)
Cost Structure
Working capital, Warehouse cost, Advance to suppliers,
Transportation cost.
Revenue Stream
Quick Delivery and Margins
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Lean Canvas

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Conclusion
The report concludes the process used by the Dennis in raising money for his company
Bitbounce. He use spam email and his target was to raise the $20 million by selling his
blockchain. The report also includes the ten starts up plans their based location and their name.
The report also clearly mentions the benefits of ICO approach for fund raising. In b section, the
report concludes the Instagram pivot, shows the development of Instagram, and mentions the old
name of Instagram that is Burbn. In last, there is a plan for business idea and name of that
business idea is Instacart all the information related to idea is explained in the report including
financial statements.

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References:
Böhme, R., Christin, N., Edelman, B., and Moore, T. (2015) Bitcoin: Economics, technology,
and governance. The Journal of Economic Perspectives, 29(2), pp. 213-238.
Bort, J. (2014) Instagram's Kevin Systrom: People Keep Asking If My $1 Billion Was Too
Small. [Online]. Available at: http://www.businessinsider.in/Instagrams-Kevin-Systrom-People-
Keep-Asking-If-My-1-Billion-Was-Too-Small/articleshow/38689569.cms (Accessed: 30 August
2017)
Chesbrough, H. (2010) Business model innovation: opportunities and barriers. Long range
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Dong, F., Hennessy, D. A., and Jensen, H. H. (2010) Contract and exit decisions in finisher hog
production. American Journal of Agricultural Economics, 92(3), pp. 667-684.
Dyster, B., and Meredith, D. (2012) Australia in the global economy: Continuity and change.
UK: Cambridge University Press
Lane, R. (2014) You Only Have to be Right Once: The Unprecedented Rise of the Instant Tech
Billionaires. UK: Penguin.
Mosca, M., and Stebila, D. (2010) Quantum coins. Error-Correcting Codes, Finite Geometries
and Cryptography, 523, pp. 35-47.
Osterwalder, A., and Pigneur, Y. (2010) Business model generation: a handbook for visionaries,
game changers, and challengers. USA: John Wiley & Sons.
Owens, T., and Fernandez, O. (2014) The lean enterprise: How corporations can innovate like
startups. USA: John Wiley & Sons.

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Pennell, A. (2012) Want to Have An Exit Like Instagram? Here's Something Every Founder
Needs to Know. [Online]. Available at: http://www.businessinsider.com/instagrams-amazing-1b-
exit-and-the-founder-skill-behind-it-2012-4?IR=T (Accessed: 30 August 2017)
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https://techcrunch.com/2010/11/08/instagram-a-pivotal-pivot/ (accessed: 30 August 2017).
Swan, M. (2015) Blockchain: Blueprint for a new economy. USA: O'Reilly Media, Inc.
Zott, C., and Amit, R. (2010) Business model design: an activity system perspective. Long range
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Rougès, J. F., and Montreuil, B. (2014) Crowdsourcing delivery: New interconnected business
models to reinvent delivery. In 1 st International Physical Internet Conference. pp. 28-30.
Emeç, U., Çatay, B., and Bozkaya, B. (2016) an adaptive large neighborhood searches for an e-
grocery delivery routing problem. Computers & Operations Research, 69, pp. 109-125.
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at: http://azdailysun.com/content/tncms/assets/v3/eedition/7/36/7368a729-9b7d-591b-985c-
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