How much money should they look to rise

Assignment Help Accounting Basics

Reference no: EM133751359

Assignment: Accounting Related

Juan and Ross have successfully started their server business. They have developed their product and have shown customers that it works. They have also successfully marketed their business and products resulting in sales of 29 servers. This means that they have successfully been able to eliminate two of the three major risks associated with any start-up business: technology risk (Does the product work?), and marketing risk (Can the product be sold?). The remaining risk is that of scale, can the sales be grown. Juan and Ross are aware that most Angel and Venture Capital investors are willing to take this risk. They initially decide to go out and access Angel funding. The problem is that they have no idea as to what their company is worth, how much money they can raise, and what percentage of the company will the investor(s) own?

Since Juan and Ross are based in San Diego they agree that they will use the standard value for companies in San Diego as their base value.

Juan and Ross have no idea as to how to rate their management talents. They are very familiar with the market, their competition, how to position their product versus their competition, the technology of their product, etc. The feedback they have received to date regarding their presentations has been very positive.

The size of the opportunity is very large with the market for servers expected to reach $45 billion in 2028.

The technology that Juan and Ross have developed is unique and solves many of the problems data center providers encounter including heat, weight, and power.

Juan and Ross do not know of any direct competition for their product although several large companies sell servers.

The two entrepreneurs believe that they know how to position and sell their products and have had some success to date. They now believe it is time to ramp up their sales and marketing efforts. Given the size of the market, they will certainly need additional investment if they are to achieve their goals.

Task

I. Value Ross and Juan's company.
II. How much money should they look to rise?
III. What percentage of the overall ownership will the investors own?

Reference no: EM133751359

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