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The case focuses on the key choices and decision issues that entrepreneurs face in the fast evolving mode of startup funding, known as ‘crowdfunding’. It is centred around three products which vary significantly on many dimensions such as the level of innovativeness, risk, social good generated by the product, and the target group. The products presented facilitate rich discussion on the key crowdfunding decisions such as relative merits of angel funding and crowdfunding, choice of the crowdfunding platform, nature of campaign, target amount and reward structure. The case highlights financing issues of startups and compare the two products in their attractiveness for reward crowdfunding.

This case is designed for use in JD/MBA programs or in contexts where mutual understanding of legal and financial issues is required. The case focuses on an entrepreneur in the security-software industry who is attempting to raise a first round of financing in October 2000. The firm was unsuccessful in attracting funding from venture capitalists and has relied on a small seed round and bridge loan from angel investors. The angels have now proposed investing $1.4 million in Series A convertible preferred stock. The entrepreneur must decide whether to accept the angel investors' proposal or revisit the issue of seeking venture capital. The case incorporates the Stockholder Agreement for the proposed Series A round, the capitalization of the company after the seed round, and five years of cash-flow projections for the firm. The case can be used in a law-school setting as a contract-drafting exercise and as an introduction to valuation. In a business-school setting, the case can help students understand the complex contract terms associated with a “plain-vanilla” form of venture capital. Valuation can be taught at an introductory level, or it can be made more complex if students are asked to incorporate “what-if” contract conditions into their analysis.

Entrepreneurship, finance, technology and innovation, general management.

This case is suitable for students in finance, entrepreneurship and general management. The case seeks to understand the challenges of funding in technology startups and how they vary from product to service areas.

Availability of capital, short term and long term, is a major constraint faced by entrepreneurs. In India, in the technology sector, services companies have been able to innovate and grow whereas product-based companies that survived the challenges of funding have been scarce. Aluru Karthik Prasanth is presented in the case as a young entrepreneur with passion and drive to pursue the commercialization of an idea he developed during his undergraduate studies in engineering. Leaving behind the beaten paths ofMTech and employment, he decides to pursue MS entrepreneurship at IIT Madras. As he starts with his program, he analyses the challenges faced by previous technology start ups, Karthik has a dilemma – deciding whether to follow a product idea or change his plans to a technology service.

A detailed analysis of the case would help students address the following questions in entrepreneurial decision making: should an entrepreneur in technology in India pursue a product idea or service idea?. What are the pros and cons of each choice in financing? How can an entrepreneur pursue a product idea and minimize his/her risks? How does an entrepreneur's personal attributes influence his/her course? (e.g. family background, need for control) What are the challenges and opportunities in each kind of funding: debt, venture, angel, etc. in the Indian context?

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Venture capital and private equity.

This case is suitable for II MBA/Executive MBA (venture capital and private equity/entrepreneurship/business models/managing family business) courses.

Soliton is a technology and software services company with operations in India and the USA providing machine vision products and virtual instrumentation services. Soliton was started by Ganesh Devaraj in 1998 after his return from the United States after higher studies. Ganesh hails from a business family in Coimbatore that had interests in the textile spinning sector. The family had been in the textile business since the early 1940s and had revenues of Rs 400 million and employed about 700 people. Ganesh, not wanting to continue in the traditional family business, ventured into the technology sector using his academic and professional experience. His family was supportive of his venture and funded his company for the first two years of operation and for scaling up operations. Ganesh is now evaluating various sources of raising additional capital at a time when there was general slowdown in the automobile sector as a result of the global financial crisis.

The goal of this case study is to illustrate the complexities that exist in financing growth of companies in uncertain times. This following are the expected learning outcomes: discuss and understand the nuances between different sources of early stage funding: personal wealth, family, and angels; compare and contrast the differences between family funding and venture funding; and highlight the benefits and limitations of family funding.

Teaching notes are available.

▪ Identify and explain the factors that contribute to the success of a restaurant business.

▪ Analyse different sources of entrepreneurial finance.

▪ Identify and explain local entrepreneur’s expectations from a funding agency.

▪ Evaluate investment decision-making criteria for entrepreneurial funding agencies.

Kartikey Rajput, the promoter of a food park Urban Chowk, was waiting for the Covid regulations in the country to be relaxed. The entrepreneur in him found a business opportunity to provide hygienic food with a beautiful ambience and floated a food park (Urban Chowk) with the support of his wife Nikita Agrawal in 2017 and the second edition amidst Covid in 2020. The business model was well-appreciated by food vendors as well as customers. Rajput could see future growth potential in urban India. But his aggressive business plan to open five food parks in different cities in the next three years was disrupted due to the Covid pandemic. The expansion required huge investments, and post-pandemic challenges were plenty. The decision to go beyond Ahmedabad required the selection of cities besides the major challenge of the financing choice. The new cities might have huge footfall potential but finding the right location at the right price was a different challenge. Rajput was also concerned with the sources of getting the required finances. The entrepreneur was contemplating and evaluating the alternative sources of finance available to a start-up.

This case is appropriate for a graduate and post-graduate level programme in the courses like entrepreneurial finance, entrepreneurship and strategy. This case can also be used in an executive programme on management and Management Development Programmes (MDPs) on entrepreneurship or entrepreneurial finance.

Teaching notes are available for educators only.

CSS 1: Accounting and Finance.

In June 2004 Purinex, Inc., a pharmaceutical company with several clinically and commercially promising drugs in development, expected to secure a partnership with a major pharmaceutical company sometime in the next four to 12 months. That partnership, if secured, would enable Purinex to develop one of its leading compounds as a drug. The company, however, had no sales or earnings and only 11 months of cash on hand. The student must assess whether the company should attempt to secure financing now or wait until it consummated a partnership deal. The tasks for the student include evaluating the probabilities that collaboration with a pharmaceutical company would actually happen; determining whether the company stay above water until such occurred; and analyzing the other risks to the company under these circumstances.

“Starting up a new company” and “development of technology-based venture”.

The target audiences for this study are advanced business or non-business undergraduate students and MBA students taking courses of entrepreneurship, management of innovation and organization theory and design.

Yeayyy.com was a private limited company based in Bandar Baru Bangi, Selangor, a township located about 30 km south of Kuala Lumpur. It was founded by Mr Hazmin in early 2010 with a seed funding of RM150,000 (about US$50,000). By the end of 2014, its core businesses include developing mobile application (app), software and website, as well as conducting information technology (IT) training. The company had developed its own animation cartoon, Oolat Oolit, and had commercialized several mobile app inventions. These mobile apps include a Jawi (traditional Malay writing system) app, mobile games and Facebook apps which were compatible with most mobile operating systems. Since its inception, Yeayyy.com had aspired to follow the footsteps of the internationally acclaimed Malaysian home-grown animation production house, Les’ Copaque, which had produced the popular Upin Ipin series. Similar to Les’ Copaque, Yeayyy.com also planned to commercialize its in-house characters into TV series and to market related merchandises, along with its collaborative partner, CikuTree Studio. However, by the end of 2014, the company’s seed funding had depleted, thus forcing Mr Hazmin to strategize for the company’s future.

Understanding the process of entrepreneurship and technology-based venture development enables case analysts to apply the concepts in many situations involving business opportunities and company development.

CSS:3 Entrepreneurship.

After completion of this case study, students will be able to describe the funding path for start-ups, including the amounts and profiles of the usual investors or sources of funds, according to the moment in their life cycle and the characteristics of the initiative; highlight the challenges faced by start-up founders in weak entrepreneurial ecosystems and risky institutional environments; and argue in favor of or against different modes and typical instruments of venture capital (VC) investments in the early stages of new businesses, each of them different regarding dilutions, valuation potential, depth of negotiations and term sheets.

Asistensi, a technology and telemedicine start-up founded in 2020 in Venezuela by three entrepreneurs (Andrés Simón González-Silén, Luis Enrique Velásquez and Armando Baquero), raised US$3m in less than a year in a seed round in which it attracted the attention of professional VC funds such as Mountain Nazca, Alma Mundi Ventures and 468 Capital. Everything was set for launching operations in Mexico and the Dominican Republic in April 2021. However, a series of difficulties led to higher expenditure than planned, prompting the entrepreneurs to seek additional capital. The decision on the financial instrument to be associated with the potential valuation and shareholder dilution figures has been posed as a dilemma.

The case study focuses on understanding the start-up financing process. It can be used effectively in management- and finance-related subjects for graduate students taking introductory topics in entrepreneurship and entrepreneurial finance, as well as introductory executive education courses in entrepreneurship, entrepreneurial finance and VC.

Teaching notes are available for educators only.

CSS3: Entrepreneurship

The learning outcomes are as follows: to assess the competitive position of a small business-to-business (B2B) company to remain competitive in a developing country; to identify and shape the business opportunity that represents serving small and medium enterprises that would lead to competitive positioning in the B2B environment; and to compare innovation and commercialization projects through strategic dimensions related to managing a technology company in a way that fosters business profitability and growth.

Margarita Kaplun, founder and CEO of Kapter, a small company providing country-wide technical and consultant services on thermography to industrial hubs in Mexico, had positioned the company as a reputed provider. However, the company had experienced razor-thin margins. Margarita needs to decide whether they pursue the following grant to fund a project on technology development that will source the competitive position or pursue a commercial project that help them achieve a larger customer base to reap higher income.

The case is oriented for an undergraduate audience, attending entrepreneurship, innovation and industrial organization courses. It depicts issues of technology-based entrepreneurship and is suitable for students in business, management and engineering.

Teaching notes are available for educators only.

CSS 11: Strategy.

Aramex PJSC: carving a competitive advantage in the global logistics and express transportation service industry.

Entrepreneurship, International Business, Strategy.

Post-graduates, Practitioners.

This case chronicles the Aramex PJSC story of entrepreneur Fadi Gandhour. The case looks at the new start-up, its growth and financing plans for expansion and how it got a competitive advantage in an industry dominated by big players. Aramex, as of 2012, was the only Arab company to have successfully listed on the NASDAQ Stock Exchange. After 30 years at the helm of the company, Fadi Ghandour, the Chief Executive Officer (CEO), was stepping down and was being succeeded by regional head, Hussein Hachem, the CEO of Middle East and Africa. Aramex had a competitive edge in emerging markets, and Fadi and Hussein knew that the route to sustainable growth was to capitalize on this opportunity using organic growth, acquisitions and strategic alliances.

Strategy included looking at gaining a competitive advantage in the Middle East, North Africa, South Asia and other emerging markets. Lessons are provided on capitalization of opportunity, funding and creating an organization culture that is sustainable and reflects the Founder's ideal.

Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.