Identify potential sources for financing

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1. [Financing Concepts] The following companies are in different stages of their life cycles. Identify the likely stage for each business and describe the type of financing each business is likely to seek and identify potential sources for that financing.

A. Phil Young, founder of Pedal Pushers, has an idea for a pedal replacement for children's bikes. The Pedal Pusher will replace existing bike pedals with an easy-release footrest to help younger children hold their feet on the pedals. The Pedal Pusher will also glow in the dark and provide a musical sound while pedaling the bike. Phil is seeking financial assistance to develop functional prototypes.

B.Petal Providers is a company that is trying to model the US flower industry after its European counterparts. European flower markets tend to have larger selections at lower prices. Revenues started at $ 1 million last year when the first Petal Providers "mega" floral store opened. Revenue is expected to be $ 3 million this year and $ 15 million next year after two additional stores open.

2. [Life Cycle Financing] The following companies have provided information on how they are financed. Link the type and sources of funding to where each business is likely to be in its life cycle.

A. Voice River offers multimedia services on demand over the Internet. Voice River raised $ 500,000 of the founder's equity in April 2019 and $ 1 million "seed" funding in September 2019 from the Sentinak Fund. The firm is currently seeking $ 6 million for a round of growth financing.

B.Electronic Publishing raised $ 200,000 from three private investors and another $ 200,000 from SOFTLEND Holdings. The financial capital will be used to complete the email delivery and subscription management services software development.

3. [Business Financing] Identify a successful business venture that has been in business for at least three years.

The instructor can assign a specific business company or allow students to identify and research companies in which they are interested. Alternatively, the instructor may choose to assign one of the two culminating cases (Ecoproducts or Space Technology) presented at the end of this text. in order to try to answer the following questions.

A. Use historical revenue information to examine how this particular company went through the stages of its life cycle. Determine the duration of the development stage, the start stage, etc.

B. Determine the sources of financing used during the different stages of the life cycle of the enterprise.

C. Identify the owners of the capital stock of the company and how the shares have been distributed among the owners. How much of the property has been allocated to members of the management team? What agency conflicts, if any, can you identify?

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Reference no: EM133075841

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