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Tutorial 2 Question Answer

Petal Providers is a floral retail business that opened its first store last year, generating $1 million in revenue. It opened two more stores this year and expects $3 million in revenue, growing to $15 million next year. As a business experiencing rapid growth through opening new stores, Petal Providers is likely seeking financing for expansion, such as venture capital or loans, as it has established revenue but is still growing. Voice River provides media on demand over the internet. It raised founder's capital and seed funding from a venture capital fund. It is now seeking a first round of growth financing, placing it in the startup stage. Electronic Publishing raised money from private investors and a venture capital firm to

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58 views

Tutorial 2 Question Answer

Petal Providers is a floral retail business that opened its first store last year, generating $1 million in revenue. It opened two more stores this year and expects $3 million in revenue, growing to $15 million next year. As a business experiencing rapid growth through opening new stores, Petal Providers is likely seeking financing for expansion, such as venture capital or loans, as it has established revenue but is still growing. Voice River provides media on demand over the internet. It raised founder's capital and seed funding from a venture capital fund. It is now seeking a first round of growth financing, placing it in the startup stage. Electronic Publishing raised money from private investors and a venture capital firm to

Uploaded by

williamnyx
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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TUTORIAL 2: CHAPTER 1

EXERCISES/PROBLEMS AND ANSWERS


(1)

The following ventures are at different stages in their life cycles. Identify the likely
stage for each venture and describe the type of financing each venture is likely to be
seeking and identify potential sources for that financing.

Petal Providers is a firm that is trying to model the U.S. floral industry after its
European counterparts. European flower markets tend to have larger selections at
lower prices. Revenues started at $1 million last year when the first mega Petal
Providers floral outlet was opened. Revenues are expected to be $3 million this year
and $15 million next year after two additional stores are opened.
Since the venture has already established sizable revenue and is in the process of
growing its venture by opening new stores, the firm has just entered the rapid growth
stage.
(2)

The following ventures have supplied information on how they are being financed.
Link the type and sources of financing to where each venture is likely to be in its life
cycle.
a. Voice River provides media-on-demand services via the Internet. Voice River raised
$500,000 of founders capital in April 2008 and seed financing of $1 million in
September 2008 from the Sentinak Fund. The firm is currently seeking $6 million for
a growth round of financing.
Voice River received development funds in the form of founders capital and seed
financing. It is currently seeking first round financing at the startup stage.
b. Electronic Publishing raised $200,000 from three private investors and another
$200,000 from SOFTLEND Holdings. The financial capital is to be used to complete
software development of e-mail delivery and subscription management services.
Electronic Publishing is still in the development stage. It has raised funds from angels
and an early stage venture capital firm.

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