Read the case “Tactus Tackles Fund-Raising” at the end of Chapter 8 and answer the questions that follow: 1. Craig Ciesla and Micah Yairi eventually turned to friends and family for funding. Should they have done that first? What are the risks with raising money from such individuals? Many us have heard don’t borrow money from family or go into business with friends. In the case of Tactus fund-raising, they faced many financial obstacles in raising their capital. Craig and Micah did the right thing by not obtaining funds from friends and family at first. One of the major reasons new startup companies fail is because they undercapitalize. A startup company must have enough capital to get establish and stay afloat through the slow times before experiencing prosperous times. Yes, it is true. Friends and family are more willing to listen to your business plan and help out. As stated before, don’t borrow money form family or go into business with friends.
If you are feel uncomfortable using their money. Perhaps, one should utilize their expertise or labor. This will free up some of the capital to be use for other resources. In the end, try not to borrow funds from friends and family to prevent jeopardizing those relationships already establish. Instead, if you must try to utilize their services the company may need until the business can bring positive cash flow. 2. What are the risks and benefits of waiting until they had been granted patents to ask for customer feedback? An inventor should file a patent early and often. It protects the inventors from society’s constant needs and problems. If your invention has been in public disclosure one day before a patent is filed. One cannot file a patent application with some foreign countries providing a one year grace period (Patents-Trademarks-Copyrights). The advantages of getting a patent are getting financial rewards, gaining competitive edge, an early start advantage, and reputation and associated opportunities.
The risk of not filing patent can trigger new competition from other parts of the world. This will produce a court battle with the competitor. 3. The partners gave up equity in their company — part of the ownership — to get help they needed. Was this a good idea? Why or why not? Tactus was having a hard time raising the funds to startup the company. By giving up equity in their company helped them file critical patents to protect their invention before engaging the potential customers. This was a good idea because Tactus has a unique invention that can be profitable in the future. This allows them to free up some of the capital to attract an angel investment. In the end, this strategy paid up (Abrams). 4. Why do you think Ciesla and Yairi stuck it out, even with such bad luck? What would it take for you to be so persistent? Ciesla and Yairy had a vision and innovation towards the future. They saw a new technology that is a blue ocean product.
Their new concept and perseverance was one they will value with this innovation and new product. Raising the funds for their company was challenging. However, their hard work paid out. I recently read an article in Bloomberg Business week informing the public of invention improving usability of touch screen devices (Tactus Technology Inc., 2012). This vision helped them continue with their efforts to build the company. I know that if I will have an innovated vision as they did. I too will be persistent with my business venture and vision towards my innovated dream. One cannot give up on an innovated invention.The success of Ciesla and Yairy shows me that hard work and persistence on a vision pays off in the end.
Abrams, R. Tactus Tackles Fund-Raising. In R. Abrams, Entrepreneurship: A Real-World Approach (pp. 194-195). Patents-Trademarks-Copyrights. (n.d.). Retrieved December 29, 2012, from Patent-Ideas: http://www.patent-ideas.com/Patentability/Public-Disclosure-and-On-Sale-Bars.aspx Tactus Technology Inc. (2012, December 22). Retrieved December 29, 2012, from Bloomberg Business Week: http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=140893150