case tomorrow

[Justin Meltzer]

hey, did we ever set up a time to meet for the case due tomorrow?

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Signature by Airtime for Email

[Ash, Hilary]

The next assignment isn't due until next Monday. We have a guest speaker tomorrow. 

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[Justin Meltzer]

oh nice

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[Michael Bear]

When do you guys want to meet for the next one? Sunday?

oh nice

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[Shreeya Goel]

I have another meeting at 5:30 that will probably be a while... 8? If that's too late I can do earlier in the day or on Saturday evening.

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--
Shreeya Goel

Jerome Fisher Program for Management and Technology

The Wharton School 2014 | University of Pennsylvania

Candidate for Bachelor of Science in Economics

School of Engineering and Applied Sciences 2014 | University of Pennsylvania

Candidate for Bachelor of Science in Engineering - Computer Science

215 251 1245

shreey...@gmail.com

[Michael Bear]

8 is fine with me on Sunday

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[Ash, Hilary]

Hey all, 

I have chapter from 8-9 on Sunday. I can try to get excused or come as soon as its over. Otherwise, I am happy to meet earlier in the day as well. Let me know! 

Hilary 

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[Michael Bear]

I can meet anytime after 3. Also, the libero totally touched that ball to end the second game

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[Shreeya Goel]

I can do 3 - 5:30

[Ash, Hilary]

That works for me if it works for everyone else. 

Also, there was DEFINITELY a touch on that ball to end the second game. Whoops

Sent from my iPhone

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[Justin Meltzer]

3 on Sunday is good with me.

- Justin

[Ash, Hilary]

Hey guys!

Here is the write-up for Questions 1-2. I'll submit it on canvas!

Best, 

Hilary 

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[Shreeya Goel]

Hey guys, 

I was just looking over the calculations and I think for 1b, the number of new shares for a 30% required ror is 228,501, rather than 2,228,501 because the calculation is supposed to be (1000000/1-0.186) - 1000000(which is what you have down, I figure the 2 million part was just a typo). Also, consequently, the price per share is $21.9, rather than $2.24. 

I might be wrong, so could someone verify this? 

[Ash, Hilary]

Hey Shreeya, 

That is the right calculation so it looks like we must have had a little typo. Would you be able to fix the document that I sent out and send an email to the TA before class? I am about to walk into a meeting otherwise I can try to take care of it after this. 

Best, 

Hilary

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[Shreeya Goel]

Sure, I can do that.

[Michael Bear]

what time cane everyone meet tonight?

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[Ash, Hilary]

I think we decided on 8/8:15. If you guys want to get started at 8, I can probably make it or I might just be a few minutes late. I have another meeting in the Starbucks under Commons at 7:30. 

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[Michael Bear]

riiiiiiight - sounds good

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[Justin Meltzer]

Here are the answers for number 6:

6.a.

- should try to recruit angel investors who invest in pre-prototype stage companies
- should try to get money from multiple angel investors in order to gain better terms and get a broader range of advice and conections
- possibly even very early stage VC fund that will invest in people with just ideas

Problems

- no product will make it difficult to attract investors
- for the amount of money he has put in, he doesn’t seem to have much to show for it, no full business plan or product

6.b.

- he should try to value the company similar to how Roger valued his company, since he thinks his company has similar growth metrics
- we recommend convertible note because it’s quicker and involves less legal fees
- it also allows him to put off valuing the company at a later round when he’s ready for a more serious fund raising round and when the company is closer to revenue prospects (making it easier to value)
- $100,000 for a convertible note is reasonable. Whether there is interest on the note or not would be up to negotiations between Henry and the angels and/or VC fund. Whether there is a cap or not on the note would also be up for negotiations, but we would expect the note to have a cap because of how little progress Henry seems to have made over a period of 6 months and $20,000 invested

[Ash, Hilary]

Here is the document that I started for the assignment and the answer to 3! 

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[Michael Bear]

here's 4

4

a.) The proposed scenario will increase Benedicta’s effective rate of return. Because the standard preferred component is a 1:1 conversion to common stock, her ownership percentage of the company remains the same. However, the entire original principal amount is also repaid to the holder of the security, so this increases her IRR. With this in mind her IRR would now equal 71%, which can be seen on our attached excel sheet.

 

b.) In order for Benedicta to still receive her 50% required rate of return, she needs a final return in year 5 of $38,000,000, or the 38% final ownership as we calculated before.  Because she is receiving $5M in this end year back, she now only needs 33% of the company to maintain her 50% return. This would then equate to 492,537.31 shares at a price of $10.15 per share.

 

c.) By using participating versus standard preferred, Benedicta is choosing a less risky form of investment. She has decided to exchange a portion of her ownership for ensured repayment of principle.  This is a more risky form for Roger with debt on the balance sheet, but he is compensated for this by retaining more of his ownership. 

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[Michael Bear]

and the excel file 

[Shreeya Goel]

kewl submitted it