個案總覽

The case explores the methodologies for valuing an early stage, IP based business. Endomagnetics is a university spin-off based on technology from University college London. By the time of the case the business has raised (and largely spent) a seed round and is about to raise 'Series A'. The new CEO, Eric Mayes, is in discussion with investors. There is some interest and he knows that he'll soon need to propose - and justify - a pre-money valuation. He has the usual set of base assumptions on market size and penetration along with information on similar businesses. The question is how he can assemble this information to produce a valuation. The case uses a series of spreadsheets (created by a MBA intern as it happens) that take us through all the alternatives from detailed bottom-up 'decision -tree' methods through to more sweeping market comparables, examining the strengths, practicalities and limitations of each approach.

Eight19 is a technology-based start-up company based on Cambridge Science Park. The company is developing a new (and very low cost) solar-panel technology aimed primarily at domestic use in developing countries. The case describes the issues faced by eight19 as it develops a business model for the new technology - in particular balancing competing needs: to generate sufficient revenue to fund operations (and not run out of cash), to generate a sufficient return for investors, to ensure widespread adoption of the system by users by users who cannot afford the up-front costs, to incentivise distributors, to guard against opportunistic behaviour by users, to create loyal users and to build and maintain a positive brand. The case illustrates the importance of the business model (rather than the product per se) and the imperative to build and maintain the 'social legitimacy' of a venture in order to assure profitability in the long term.

Supplement to case LBS171