business investor model netlogo

Finding Investors for Your Business

If you’re starting a new business or growing an existing one, you may find yourself in a position where you need some outside funding to get to the next level. Read on to learn how to find investors for your business, and some tricks for preparing to meet them.

Angel investors are outside investors who invest a certain amount of cash into your start-up or established business. In return, these investors receive a stake in your company, and can grow their investment as your business grows. There are angel investors who specialize in a range of businesses, from flashy tech start-ups to brick-and-mortar shops. You can consult a directory of angel investors to get more information about individuals who might be interested in working with your brand.

Start-up Incubators

Start-up incubators are ideal for small start-up firms. As the name implied, these unique communities are created to incubate fledgling businesses in their early days. Often, incubators are comprised of multiple small businesses and some mentors or guides who help business owners get through the toughest days of managing their new brands. While they participate in the incubator program, small business owners get a co-working space to work in, and maybe even a little seed money. In return, the incubator leaders receive a share in each of the small businesses.

Traditional Banks

Traditional banks aren’t usually the first thing that comes to mind when small business owners consider funding. And it’s true that a traditional bank loan isn’t an option for many businesses, especially during the first few years of operation. However, for established businesses that need a little funding to grow or expand, traditional bank loans are a safe, manageable way to get those new funds.

Crowdfunding

Crowdfunding is a relatively new way to approach the business funding puzzle, but can be an ideal option for certain brands. The crowdfunding process works by businesses sharing their ideas on online platforms, where viewers can then choose to opt in by donating a certain amount of money to the brand owners. In return, they might receive swag or other exclusive perks. Crowdfunding funds are often locked until certain fundraising goals are obtained. If the funding fails, investors get refunded.

Friends and Family

While it’s probably not the first funding source you have in mind, friends and family are a viable option for obtaining new business funding. Some business owners see success after family members invest money into their ideas, and other investors do well by soliciting small amounts from their pool of family and friends. This investment method certainly isn’t ideal for everyone, but in some situations might be a good fit.

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WHAT IS IT?

This model is a simple activity designed to teach compound interest. Students have a choice between investing their money with a teacher-controlled interest rate or using their money to purchase a car at a teacher defined price.

HOW TO USE IT

Quickstart Instructions:

Teacher: Follow these directions to run the HubNet activity. Optional: Zoom In (see Tools in the Menu Bar) Teacher: Open up the HubNet Control Center (see Tools in the Menu Bar). This will show you the IP Address of this computer. Everyone: Open up a HubNet Client on your machine and input the IP Address of this computer, type your user name in the user name box, and press ENTER.

Teacher: Setup the activity by selecting a cost for cars and an interest rate using the CAR-COST and INTEREST-RATE sliders and press the GO button. Everyone: Decide how to use your money by either investing, adjusting the FRACTION-TO-INVEST slider and pressing the INVEST button, or buying a car with the BUY-CAR button.

Teacher: Press the NEXT-ROUND button. Students who have invested will receive the calculated interest.

Teacher: To the activity again with the same group, press the SETUP button to return all students back to the initial conditions. To run the activity with a different group of students press the RESET button in the Control Center and follow these instructions from the beginning.

RESET - Returns all current users to the initial state. This should be used to restart the activity. GO - runs the activity NEXT-ROUND - Students who have invested will receive the calculated interest and all students will be given the option to invest again.

CAR-COST - Sets the cost of each car. INTEREST-RATE - Sets the interest rate for all investors.

ROUND - Indicates the number of investment rounds have already been completed.

Client Information

After logging in, if GO is pressed in NetLogo the client interface will appear for the students and the student will be assigned a turtle and 100 dollars which will be displayed in the MY MONEY monitor. The current round will be displayed in the ROUND monitor starting out with one. The money they have currently invested will appear in the INVESTMENT monitor, the return from their previous investment will be in the INVESTMENT-RETURN monitor, and the number of cars they own will be in the CARS monitor. These will all be initialized to zero.

Each round the student manages their money by either selecting a fraction to invest with the FRACTION-TO-INVEST slider and pressing the INVEST button, or buying a car with the BUY-CAR button.

THINGS TO NOTICE

There are at least two possible ways to run this model with a a group of students. One way is to tell students the number of rounds in the activity. Another way is not to tell them. If you try both ways, students may realize that it is important to figure out a strategy, and that knowing how the market behaves is helpful for choosing a strategy. Other activity options are to change the cost of the car and/or the interest rate in the middle of the activity. Note the difference between these two changes. Students know the price of a car before buying it. But students who invest money are taking a risk, because the teacher can wait for everyone to invest and only then change the interest rate. If students think this is unfair, they should discuss what the rules of the game should be and how these rules would reflect (or not) a real market.

THINGS TO TRY

The teacher should try both telling students the number of rounds in the activity and ending after a randomly selected number of rounds without informing the students. The students should think about how they should adjust their strategy for each set of conditions. The teacher should also adjust the interest rate and the cost of a car throughout the game to simulate an indeterminate market.

EXTENDING THE MODEL

Currently all of the conditions of the world are controlled by input from the teacher; these variables, cost of car, interest rate, and number of rounds, could be controlled automatically by the model. There is only one type of investment now, try adding low or high risk investments so the rate of return is not always the same.

RELATED MODELS

Public Good

HOW TO CITE

If you mention this model or the NetLogo software in a publication, we ask that you include the citations below.

For the model itself:

• Wilensky, U. (2004). NetLogo Investments HubNet model. http://ccl.northwestern.edu/netlogo/models/InvestmentsHubNet. Center for Connected Learning and Computer-Based Modeling, Northwestern University, Evanston, IL.

Please cite the NetLogo software as:

• Wilensky, U. (1999). NetLogo. http://ccl.northwestern.edu/netlogo/. Center for Connected Learning and Computer-Based Modeling, Northwestern University, Evanston, IL.

Please cite the HubNet software as:

• Wilensky, U. & Stroup, W. (1999). HubNet. http://ccl.northwestern.edu/netlogo/hubnet.html. Center for Connected Learning and Computer-Based Modeling, Northwestern University. Evanston, IL.

COPYRIGHT AND LICENSE

Copyright 2004 Uri Wilensky.

This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License. To view a copy of this license, visit https://creativecommons.org/licenses/by-nc-sa/3.0/ or send a letter to Creative Commons, 559 Nathan Abbott Way, Stanford, California 94305, USA.

Commercial licenses are also available. To inquire about commercial licenses, please contact Uri Wilensky at [email protected].

This activity and associated models and materials were created as part of the projects: PARTICIPATORY SIMULATIONS: NETWORK-BASED DESIGN FOR SYSTEMS LEARNING IN CLASSROOMS and/or INTEGRATED SIMULATION AND MODELING ENVIRONMENT. The project gratefully acknowledges the support of the National Science Foundation (REPP & ROLE programs) -- grant numbers REC #9814682 and REC-0126227.