Trendsetter Harvard Case Solution & Analysis

Trendsetter Case Solution

Wendy Borg and Kushdog are two office colleagues who plan to open their own business by working on an idea for a warehouse and distribution management software program for retailors by the name of Trendsetter software.

trendsetter case solution

trendsetter case solution

Trendsetter is a Mac stock and commodity analysis software, which helps you make decision regarding when to buy and sell.This software is designed to provide more innovation and advancement in warehouse and distribution management solution to the retailers that mostly work in the garments industry. Before working on this software,some amount is required externally so as to invest through different ventures, as well as a partner to manage the development phase.

The founders are of the belief that top capital ventures are not interested in investing in the initial business plan, as more than 2000 proposals are rejected from the ventures every year. This situation has made Borg and Kushdog more scared to introduce their proposal to the market.Their own capital is not enough to introduce the product therefore, the outside capital is much needed to process the workings.

Fortunately, the entrepreneurs found two well-connected ventures in the capital communitythat were interested to invest in the software through their best friend.The plan was presented to seven ventures, and six of them considered the plan without any reluctance, therefore this gave them the assurance that they were on the right track.

The two ventures who are interested to invest in the company are; Alpha Ventures and Mega Fund, however these entrepreneurs do not have any experience regarding venture capital and its field. Wendy and Kushdog are initial business owners and they do not have much expertise to analyze the financial market therefore, it was a threatening situation to select from the dffffalternative venture.

Wendy Borg and Kushdog have to make the decision quickly regarding the alternative and to make sure that their decision is effective and accurate, as they are new in the market, therefore they need to focus more on the external circumstances and the demand of their product. Owners should make the decision by analyzing the term sheets, which are provided by the investors. Moreover, the term sheets are detail oriented regarding the investment amount for the venture and their way of dealing the company.

Investors tend to generate profit from their investment and different share plans to avail extra benefits. In addition to this, a certain time of period will be given to the owner to return their invested amount. Ventures have the right to terminate their agreement by any cause, or if they find any uncertainty from the clients. These terms and conditions are vital for choosing the alternatives. Both ventures are highly interested in investing as the product has more chances of success.

The pre-money valuation of Alpha is $7,350,000, assuming the option of employees around 3,000,000 without any issuance of Escrowed shares. The Escrowed share will be issued once the company meets the revenue of $500,000 in the fiscal year 2000, whereas pre money valuation of Mega Fund is $7,000,000 and the most money valuation is $12,000,000 without any Escrowed shares and all.

The per share price of Alpha stock is $1.05, whereas Mega Fund is $1.00. Alpha is operating through non-cumulative structure and Mega Fund is operating through the cumulative structure. Therefore, it could be said that their liquidation processes are different from each other......................

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