Transcript Adam Smith Revisited

Why Innovation thrives in U.S.
Innovation & GDP Growth
Cars
United States
100
.
---------- B Innovation =>
↑ full potential
P1
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50
LRAS1
Price
Level
50
SRAS1
E1
AD1
100
Technology
Goods
Y1
GDP
Real
GDP
GDP
Raising Money for New Ideas
How innovation happens in the USA
Innovation & USA
• Financial Capital is needed to start a new businesses
– Without money => ideas can’t become reality
• Ideas for a new business easily raise money in USA
– Google, Apple, Microsoft, Facebook, Bloomenergy etc…
Typical path to start a Company
Step #1:
Start with money from friends, family & fools
Step #2:
Step #3:
Step #4:
Raises more financial capital from angel investors
Sell some of business to venture capital firms
Grow business & launch Initial Public Offering (IPO)
Venture Capital Firms (VCs)
• Investment Funds which “lends” money to select startup
companies with high growth potential
• The VC gives money in exchange for partial ownership
– stock options in company
• VC often has a say in Management
IPO’s
• Transforms a company from private to public
– Stock is publicly traded
• New corporate rules apply
– Must report earnings every 3 months
– Inside information rules apply
Recent IPO’s
IPO
Company was overvalued
• 3rd largest IPO ($16 billion raised)
Sold at :
104 billion market capitalization
100 PE ratio
Zuckerberg owns 24% Company
Controls 56% of voting stock
New Option:
Crowdfunding
• Movie which follows an actual
start of a dot.com company
Movie
Top 10 Lessons from Movie