Problem Diagnosis

MuMate is a fictional beverages company and the owners of the company are now looking forward to raise a capital of $ 2.5 million to fund the national expansion of the company. The founders of the company have bootstrapped the company to its current point and they are now negotiating with a venture capital firm, DuPage Venture to secure a financing of $2.5 million. The company is based in Seattle and currently negotiations are going on between the founders of MuMate and the owners of the venture capital firm.

Sarah and Angela are the founders of MuMate and they are having negotiations with Ed Rodriguez and Jonathon Canton to settle up for a startup round financing for the company. This case also highlights the origin of the company, where the idea came from, how Angela and Sarah partnered to start this company and also discusses its evolution to the current point. It also describes the business and the market model of the company and highlights why MuMate, at this stage, requires funding to sustain its growth in the long term.

The core product of the company is MuMate, which is a vegan protein tea and it has an intensely loyal customer base. In this case analysis, we examine and analyze the problems faced by the founders of MuMate. First, the financial projections have been prepared for the next four years from 2012 to 2015, however, they do not appear to be realistic. Therefore, we would be projecting the financials of the company based on sound assumptions. After this, the valuation of the company would be performed on the basis of the VC capital method and finally, we would analyze whether a single round financing or series financing should be taken from DPV. This would guide us to make other decisions such as the dilution of the equity and loss of control.

MuMate Case Analysis Harvard Case Solution & Analysis

Case Analysis

We begin our analysis of MuMate’s situation by first performing the financial projections for the next four projected years as shown in exhibit 6 of the case. This is explained as follows:

Financial Projections for MuMate till 2015

Sarah and Dank had projected the financial projections for MuMate as laid out in exhibit 6. However, Maxwell had less confidence in the financial and the sales projections of the company and he wondered whether sales of $50 million would be possible by the end of 2015 or not. A bottom up approach had been used by Sarah and Dank to estimate the annual sales from the weekly volume that could be achieved by MuMate from the different types of accounts.

We have therefore, revised the financial projections based on the sound assumptions provided in the case and the historical pattern of MuMate. The 2011 sales growth rate of the company is 158% as calculated in the excel spreadsheet and it is assumed that, after the rapid growth of the firm till 2015, the revenues would still grow between 10% and 20% before they settle down to a fixed rate.........................

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