Board Perspective on Funding Request, Investment, and Venture (Case Study Sample)

Board Perspective on Investment
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Board Perspective
Question 1: Funding request: Has management identified the correct amount of money required? What is the runway for this business if they get the investment? What is the runway without the investment?
From a board member perspective, the funding request is the correct amount since it would serve the organization's purposes without giving away too much control to investors. The $950,000 amount is reasonable for the organization since it requires money for the development of the various projects that demand some capital investment, which the company cannot access right now. The management of the company would use the cash to expand its operations, implement the marketing plan, and provide the working capital. With this capital, the organization would grow fast in a highly competitive market. Since the cash would be used to implement the company's strategic plan, the organization would be able to grow its operations more rapidly, allowing it to cover a bigger market area. The investment is essential for ensuring that the company secures co-packers in new markets necessary for the growth of the business. In addition, the organization would require more funding to implement its strategic plan, which involves introducing the products in trade shows, offering discounts, and gaining independent representatives. Therefore, these funds would play a vital role in the growth of the business. Notably, if the company's growth continues at the project rate for fundraisings would be conducted. Without the money, the organization would not competitively expand and would take too long to gain recognition in the market. There is a possibility that the technology would not be completely commercialized within the projected period. This situation places the company in a less competitive position, which would allow other rivals to force it out of the market.
Question 2: Based on the amount of investment you have identified as correct, what is the impact on the current owners and the capital structure if this new investment is accepted?
Considering the company valuation through the liquidation approach, the organization would witness a growth in assets from 63,855.98 to $1,013,855.98. The new investment would increase the cash available at the firm and reduced the percentage of liabilities. The owners would transfer some control to the new investor. The discounted flow approach found that the company has a valuation of about $38,820.246, which would grow to about 39,770,246 once the funds have been provided. In that case, the new investors would hold a stake of about 2.4% of the company. The proportion means that the company owners would remain firmly in control of the organization. The investment would not significantly affect the capital structure or the ownership of the company. In the future, the firm would s