You have agreed to act as an advisor to ‘FloMax’, a promising early-stage technology venture based in Cambridge. They wish to develop a funding strategy for the next 48 months, at which point they should have achieved break-even.
Write a 2000-word individual report to describe, and discuss how you would develop a coherent funding strategy for the venture, which has the following characteristics:
i. Stage – Currently pre-seed, no MVP or evidence (yet) of customer traction
ii. Team – Two full time co-founders (CEO and CTO) who can survive for 6 months without income.
iii. Industry – Sports wearables
iv. Market – B2C, initially targeting competitive cyclists and rowers (assume a SOM of £50m in EU and US combined, CAGR 5%)
v. Competitors – No direct competition at present. Substitutes exist but are more expensive.
vi. I.P. – Yes, 2 patents pending
vii. Margins – Gross margin 60%, Net margin 25%
viii. Time to break-even – 48 months
ix. Total funding required to break even – £1.8m
Specifically, you have been asked to outline suitable funding options and to suggest a timeline together with milestones.
Required readings:
Required readings are compulsory texts which you must read in order to achieve the learning objectives.
Suggested readings:
The purpose of suggested readings is to extend and deepen your learning. While you are not required to read these, recommended readings will help you to expand your knowledge of the concepts and issues covered in the module.
Unit 1
Required reading
Bhide, A. (1992) ‘Bootstrap finance: The art of start-ups’, Harvard Business Review, 70(6), pp. 09-117.
Article
Wasserman, N. (2008) ‘The Founder’s Dilemma’, Harvard Business Review, 86(2), pp.103-109.
Article
Unit 2
Required reading
Huang, L. and Pearce, J.L. (2015) ‘Managing the Unknowable: The Effectiveness of Early-stage Investor Gut Feel in Entrepreneurial Investment Decisions’, Administrative Science Quarterly, 60(4), pp. 634–670.
Article
Maxwell, A.L., Jeffrey, S.A. and Lévesque, M. (2011) ‘Business angel early stage decision making’, Journal of Business Venturing 26(2), pp. 212–225.
Journal paper
Unit 3
Required reading
Eyal, N. (2013) ‘Angel or Devil: Who’s Really Investing In Your Start-Up?’
Article
Mason, C. (2020) ‘The Coronavirus Economic Crisis: Its Impact On Venture Capital And High Growth Enterprises’, European Union (Joint Research Centre), doi:10.2760/408017 pp. 177–194
Journal paper
Highly recommended if fundraising
Cowley, P. (2018) ‘The Invested Investor’ ISBN 97819164079 – No Library Ebook available – if interested in this area you would need to purchase a hard copy.
Book Recommended: Full text
Feld, B. (2016) Venture deals : be smarter than your lawyer and venture capitalist. Hoboken, New Jersey: Wiley.
Article
Rose, N. (2016) ‘Equity Crowdfunding’ Stonepine publishing’ – No Library Ebook available – if interested in this area you would need to purchase a hard copy.
Book Recommended: Full text
Unit 4
Required reading
(2017) How Venture Capitalists Really Assess a Pitch’, Harvard Business Review, 95(3), pp. 26-28
Article
Ciuchta, M.P., Letwin, C., Stevenson, R., McMahon, S. and Huvaj, M.N. (2018) ‘Betting on the Coachable Entrepreneur: Signaling and Social Exchange in Entrepreneurial Pitches’. Entrepreneurship Theory and Practice, 42(6), pp. 860-885
Article
Davis, B.C., Hmieleski, K.M., Webb, J.W. and Coombsa, J.E. (2017) ‘Funders’ Positive Affective Reactions to Entrepreneurs’ Crowdfunding Pitches: The Influence of Perceived Product Creativity and Entrepreneurial Passion‘, Journal of Business Venturing, 32(1), pp. 90-106.
Journal paper
Parhankangasa, A. and Ehrlich, M. (2014) ‘How Entrepreneurs Seduce Business Angels: An Impression Management Approach’,Journal of Business Venturing, 29(4) pp. 543-564
Journal paper
Suggested reading – highly recommended
Gafni, H., Marom, D. and Sade, O. (2018) ‘Are the Life and Death of an Early‐Stage Venture Indeed in the Power of the Tongue? Lessons from Online Crowdfunding Pitches’, Strategic Entrepreneurship Journal, 13(1), pp. 3-23.
Journal paper
Klaff, O. (2011) Pitch Anything an Innovative Method for Presenting, Persuading, and Winning the Deal. New York: McGraw-Hill.
Book Recommended: Full text.
