Fast Ion Battery Harvard Case Solution & Analysis

Fast Ion Battery Case Study Solution

Fast Ion Battery comes in the list of revolutionary batteries, which carries unique features as compared to their competitors. Nowadays, they are facing a liquidity shortfall and difficulty in managing their investment portfolio of its existing stockholders. It can be resolved through three available options,one by availing the short term financing bridge of $5 million; second by converting the existing preferred shares into a common shares and third by availing multi-stage financing for meeting its liquidity shortfall requirements.However, the multi-stage financing can be achieved by arranging a seed-up capital which invests in technology and marketing,to research and develop a battery, which have better profitability and performance that regains the confidence of their existing investors.

Problem Statement:

How can the management of Fast Ion Battery attract the foregone heavy investment again to manage its current operations and investment portfolio to recover its liquidity short fall and failure of marketing strategies to develop a market of revolutionary batteries?

Alternatives:

Company can arrange a short term financing bridge of $5 million to boost its cash flow shortage. This will make them capable of improving their credit profile while negotiating with their existing investors to pay the returns and deal amount on time. However,the company will bear more opportunity cost in terms of finance, due to short term financing,which can reverse the credit rating of the company in case of default. The second option available to the company is to convert their preferable stock holders into common stockholders which will be benefiting the company by not paying a fixed percentage of dividends rather than a certain amount dependent of annual earnings. However, they will not be ready to convert it as company is not offering more convertible shares. Moreover, the third alternative available with the company is financing through multi-stage experiments to achieve a milestone by investing in three different stages. In start, the company gets seed capital to invest in a certain project which is utilized for research and development that in turn results in a better performance and liquidity requirement for the company. However, it may result adversely by obtaining less amount of return on startup than its expenditure on R&D.

 

Fast Ion Battery Harvard Case Solution & Analysis

 

Conclusion:

From the above three alternatives, Multi-stage investment series is more appropriate as it is generating the highest value for the company of around $212 million with a return of around $8.26 million, through which more cash flow is generating for the company. Series C has the highest post money value as compared to other available options.

Implementation:

The selected option can be implemented by investing in revolutionary batteries through making its marketing effective after going through proper research and development by looking its cost and benefit analysis which can improve its financial performance and boost the confidence of its existing and new investors again. Though it will result in better credit ratings of the company as well.................

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