Read the HurryDate case. Assume you are a venture capital (VC) fund manager, considering an investment in HurryDate. Consider the following: (1) How does HurryDate create value? What are the key success and risk factors associated with this firm and industry? Host dating events in major cities throughout the US that allow single adults to meet one another. Additionally, presents an opportunity for interested companies to sponsor events with specific and unique demographic angle. Success factors include building a reputation as a trusted host for these events. Convincing single adults that this is a viable option to meet people. Risk Factors include: major internet players (ie facebook) join this limited market and dominate the industry with their resources and brand equity. Young adults decide that this is “uncool” and the industry loses customer popularity. Low barriers to entry for many small niche, local players. Sponsors could determine it is not a good use of marketing budget.
(2) Where do the financial statements reflect these success and risk factors? Facebook risks can be seen in marketing expenses (peak at 600k and recently 150k). This modest amount of marketing will never compete with the brand recognition that facebook currently possesses Low barriers to entry can be seen in modest rent fees, scalable wage expenses and moderate operation fees. These are all not significantly different that the initial year. Promos currently equate to roughly 20% of Revenues (and have significantly lower COGS) – ie greater than 20% impact on NI
(3) How has HurryDate performed in the past? What key metrics can be used to evaluate the company’s success? Revenue from events decreasing annually since 2003
Revenue from sponsorships increasing since 2002
SGA relatively constant since 2003 spike
Net Income 345k, 392k, in the last two years
(4) What are the pros/cons of the primary options for Deckinger and Testani to sustain HurryDate’s...