To: Board of organization
Date: 13th August 2015
From: XYZ
Subject: Assessment of the @HOC business plan
Miasnik and Ly Tran, two aspiring entrepreneurs are trying to raise capital for business amounting $1 to $1.5 billion. This report is based on the evaluation of this amount, business plan and to determine whether they should rise above the amount initially planned. The strategic issue is regarding the location of their Research and Development department whether the department should stay in Israel or be shifted to the United States as it involves a lot of theories, facts and figures which put more emphasis toward the decision to keep the department in Israel but the business plan is to eventually move to the United States.
Tran and Miansik are inclined towards raising finance from VC firms, angel investors, or both. Like every other source of finance, the aforementioned sources have several pros and cons. VC firms follow a slow-moving process, which consumes precious time and they are prone to conflicts, however angel investors offers a much quicker fund raising process but it’s risky and difficult to manage. From a perspective of a VC firm and angel investor, they need to be assured of the business plan and its feasibility. The idea of the industry is the foremost question that comes in mind; Tran and Miansik have an idea for an internet software company and possess a highly advanced prototype which is readily available. As @Hoc creates value by driving traffic for unintended purchases to the commerce partners’ shopping sites, these unintended purchases constitute 23% of purchases according to Jupiter Communications which makes a decent market with prospects of growth.
The opportunity generates a positive NPV of $ 5.88 billion due to its enormous revenue forecast, the business however is estimated to generate low sales in the initial stage but the forecasted growth of 2384% immediately is astounding, the core reason of this outrageous growth is the additional revenue sources from year 2000 i.e. slotting and bundled subscriptions. The reason for the increase in revenue is because of the unique quality @Hoc possesses of being a market leader. The acceptance of this software is arguable but according the facilities it offers, it’s almost safe to say that this business will thrive, the major reason for this vote of confidence is the projected income statement.
@Hoc will be hard to compete with because of the competitive advantage it will develop by accumulating and leveraging knowledge of the user, aligning with strategic partners, developing the best back-end technology and creating a top-notch business development team. The efforts above can alone create barriers to entry in this business. This is a good time to enter the market as there is no such software that exists in the present time, the idea is worth the most and these two geniuses have it and believe it to be a success. Being the first significant occupant of the market will provide @Hoc the “first mover advantage”.
Another issue would be the speed. The speed of implementing @Hoc depends on the promptness of the finance raised and therefore, angel investors will play a crucial role in the speed factor of the business.LEVERAGING ISRAELI TECHNOLOGY IN THE UNITED STATES Case Solution
According to Jupiter, the households are expected to increase from 6.8 MM in 1998 to 15.2 MM in 2002 with online trading accounts. This is a good market to enter in along with white collar professionals and sports information seekers, these kinds of users are ever-present and makes a pretty decent market to introduce @Hoc in. Will the customers prefer this software over others and will Guy Miasnik and Ly Tran be able to retain them is the most important issue to consider. The marketing planned for @Hoc involves traditional marketing methods as well as viral marketing technique to capture more customers. A situation involving exposure to danger can arise anytime, the IT industry is the one with most risks and uncertainties, the biggest being obsolescence provided the high rate of technological advancements. @Hoc may prove to be a success but to remain a success, it must incorporate innovation.
Guy Miasnik and Ly Tran lack experience and hence, it is unpredictable if they would be a good fit or not. The two entrepreneurs along with the top-notch team they are assembling has history of founding, selling and manufacturing Israel’s leading internet solutions company called Kinetica. The team is keen in moving to the United States and will clearly be a driving force in attracting investments from VC firms and business angles................
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