In October 2021, Ashish Agarwal, vice-president of the solar business vertical at Blupine Energy Pvt. Ltd., was preparing for an upcoming tender for a 300 megawatt solar project. Relying on his industry experience, Agarwal noted all the assumptions related to the capital and operating expenses for setting up this plant. He wanted to compute a tariff that he could bid that would be competitive while generating a 16 per cent equity internal rate of return—the minimum Blupine required for greenfield projects. Agarwal knew the most critical project risks were a delay in arranging the required land and module price fluctuations, so he wanted to also consider their effect on the rate of return.
In April 2014, the founder of SecureNow met with one of his classmates who was now an angel investor. The two had recently met socially and the founder had briefed his classmate on SecureNow’s online business-to-business insurance marketplace. The classmate was now expressing interest in investing in SecureNow but his valuation was much lower than the founder’s expectation. The founder was confident of SecureNow’s future growth, but he wanted funds to expand. His classmate would provide him with the kind of relationship he was seeking with an investor, but the founder wondered how he and his classmate arrived at such different valuations. He also wondered whether he should accept the funds at a low valuation, consider other options, or just postpone his expansion plans.