This LBA asks you to assume the viewpoint and play the role of the VC. This project contrasts with the entrepreneur/founder role you have assumed in other course assignments and sessions. Please note: this prompt is purposefully open-ended, so you can tailor your project’s deliverables and LO applications to a real life experience.
To get started, identify a startup within the UAE. It can be a small business that one of your relatives/friends own, or a small businesses you like to shop from. The key determination for you to make is whether to invest in the business or not. So, you need to identify, analyze, and review the business in order to determine its viability.
Guidance Questions
1. Assess the business. What are the prospects of the business from the financial, marketing, and operations standpoints? Which additional variables are important to consider when assessing the prospects of the business within its given industry? You are encouraged to apply frameworks from the class, business core, and other business courses. Make sure to generate all necessary spreadsheets, diagrams, or tables to support your analysis.
2. What are the key components of your term sheet? Motivate and justify the provisions. How would you structure your equity/stake in the company? How do you translate your goals and interests into quantitative performance metrics? Get specific.
3. Identify and outline the strategic considerations to develop the company into a successful business. What are your exit plans and provisions to include in the term sheet? Present, justify, and analyze the links between its business objectives and financial strategy.
Be sure to follow these guidelines:
– Assume your audience is knowledgeable about the concepts we’ve covered in this class and the core business curriculum. You don’t need to explain the terminology. Jump right into the analysis.
– Go deep. When formulating a response, ask why. Then ask why again and justify your explanation by citing case facts and material. Back up your explanations with evidence. Integrate numbers into your arguments.
– **Use no more than two significant digits **for all numbers in the text and exhibits (12%, 3.5%, or 0.46%, not .12480294). Less is more. Displaying too many digits makes numbers hard to read and actually obscures its value and intuition.
– All exhibits you create yourself must be included in the write-up and be properly formatted. You must also include a link to all your exhibits so that your calculations can be seen and assessed. Place this link at the very beginning and be sure to grant your professor and peer tutor viewing privileges. Follow these guidelines (e.g. avoid including numbers in a calculation cell but instead, reference inputs/assumptions cells that do contain numbers; use black text for calculations and blue text for inputs).
–> LO Annotated Appendix that includes the following:
At least 2 LO tags. (#valuation and #vcinvestors.) With a focused description of how the LO is applied. If you like, you can add additional LOs, such as #termsheet. It will be graded based on your analysis of the 4 questions above.
#LO9_investors: Explain the different types of venture capital investors and their investment parameters.
#LO10_valuation: Analyze different approaches to valuing startup companies, including comparable company metrics, dcf, option pricing theory, and the VC method.
Word count = 750