|Comparison of Financing Alternatives | |Capital resource |Firm valuation |Waiting period |Capital amount | |Wait six months |75% for 25 million 25% for 5 ~ 8|6 months |Uncertain | | |million | | | |Angel round |$17.5 million |6 months |2 million | |Venture-capital round |$15 million |3 months |10 million |
Analysis in Potential Risk
Purinex now only has cash on hand to support its development process for 11 month. Purinex has three options of capital resources. Purinex can raise new capital right now to avoid default or just wait and decide how to do latter. Each alternative may bring different risk for the company members: default risks all the members of the firm, dilution original shareholders, and control management group.
The options of angel round and venture-capital round have low risk of default, and the option of wait six months has higher default risk. If Purinex could get a partnership in 6 months, its current owners would retain complete control of the company. Angel investors are rarely involved in the firm’s management, so they have low impact on management’s control. The VC financing usually would impose significant restrictions and a VC firm would have high control of Purinex’s current management. Partnership would have low impact on dilution. Venture-capital would have higher dilution than angel round.
|Analysis in potential risk | |Capital resource |Default risk |Control |Dilution |Expected...
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