TRENDSETTER INC. Harvard Case Solution & Analysis

TRENDSETTER INC. Case Solution 

Introduction

Mr. Wendy Borg and Mr. Jason Kushdog started Trendsetter Inc. in order to deliver innovative warehouse and distribution management software program for clothing retailers.
It was estimated that with the six weeks’ time period Trendsetter, Inc would run out of itsseed money.

Q1) Go back to the Trendsetter case and create a capitalization table for the company for both the Alpha and the Mega Series A term sheets.

Alpha has given the pre-money evaluation of $7.35 million at a share price of $1.05. Moreover, their investment will be $5 million. This makes a total of 7 million shares of which 4 million are common shares and 3 million are employee option shares. In Alpha there is a provision of escrow shares of 501,253 shares, which are to be released if the company has not achieved revenue of $500,000 in the fiscal year 2000. The total post value evaluation of Alpha is $12.35 million however, the total shares in the market will be less by escrow shares for a total of 11,761,905 shares. In the case when the escrow shares are released, one can see that the total ownership in the investor goes up from 40% to 43%....................

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