NatuRi Corporation Harvard Case Solution & Analysis

Question 01: Having in regard all the information that is given in the Case Study, what is, in your opinion, the best Investor/Partner choice for NatuRi Corporation? Is it the Angel Investor, the Strategic Investor, Waltham Partners or Westlake Partners? Please justify your answers

As the case presents, NatuRi and its two founders Aravind and Kartik have to select an investor who shall provide the capital which the company needs in order to grow and expand itself in the market. The four options that are presented in the case are as follows:
Angel Investor

The first option for the founders of the company is an angel investor who is willing to make up an investment of $1,000,000. Moreover, he has already been a known individual to Kartik. The most appropriate element of his investment is that he does not have any clauses that the two founders have to fulfill. Although one disadvantage of angel investor is that since NatuRi is yet to be valued, therefore, it is rather unclear with the amount that shall be passed on to this angel investor.
Strategic Investor

The second option that is present for NatuRi is to opt for Proteon which is already into food business has also been interested in NatuRi because of the new innovation it shall explore in the market. The company is willing to invest in the idea where it has demanded a return on investment and is also looking to hold a permanent stake in the business.

Moreover, Proteon has also offered a license agreement to NatuRi where the company shall help in distrusting Rice Active themselves. However, an issue with Proteon is that, they themselves run a business; therefore, they shall be limiting their equity in the company NatuRi.
Waltham Partners

The option that is available for Aravind and Kartik is to accept the offer made by Waltham Partners which is a venture capital firm. The company has been investing in biotech investment for a long time. The major advantage of acquiring investment from them shall be that they can help NatuRi further because of their infrastructure and experience working with scientists in the past.

Moreover, the venture capital firm shall provide the amount of $500,000 in seed funding with two tranches of $250,000 where it shall also offer an investment in Series A round at a preset valuation. However, one major disadvantage of opting this method of raising capital is that they have to decide within 24 hours which is too less time to make such a decision.
Westlake

Finally, the fourth option for Aravind and Kartik shall be to opt for the Westlake Partners which is a rather small venture capital firm. The company is offering NatuRi an investment of $2,000,000 in seed money with similar terms and conditions as of Waltham Partners.

Recommendations

Based on the four options available, the most feasible and the most appropriate option for NatuRi Corporation shall be to opt for the angel investor. The reason for this recommendation is simple, since angel investor is willing to invest double the amount required by Aravind and Kartik, moreover, since the main objective at this moment for NatuRi is to raise capital therefore, the ideal financer shall be the angel investor.

Moreover, another major benefit of opting for the angel investor is that both Aravind and Kartik will be free to manage the business the way they want. Selecting any of the other three options, they might interfere in the decision making of the company which might hinder the growth prospects of the firm. Although Waltham is a large company and by working with them NatuRi might grow larger, but the issue is that the difficult structure that has been developed by them along with the Series an investment. Therefore, based on the information provided in the case, angle investor is the appropriate financer for NatuRi Corporation.NatuRi Corporation Case Solution

Question 02: Assume that NatuRi Corporation’s management has decided to choose the Waltham Partner’s investment proposal. Further assume that you are the legal counsel of NatuRi Corporation, and that NatuRi Corporation’s management is asking you for advice on the two term sheets received from Waltham Partners. Please indicate in a short memorandum:

a. What are the provisions of both term sheets that NatuRi should reject and renegotiate?

b. Explain why and how, in your opinion, the rejected provisions should be changed in order to become acceptable for NatuRi.

As per the note term sheet, NatuRi Corporation can negotiate about two aspects which are as follows:.............

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