VC Group Assignment v21-3 - Mintpond Consulting Enerkem Inc...

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Mintpond Consulting Enerkem Inc. 1   Enerkem Inc. Funding Proposal FINS3623 Matthew Pirrottina z3374566 Paul Essing z3290494 Raymond Smith z3374568 Nicholas White z3375815 Mintpond Consulting
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2 Mintpond Consulting Enerkem Inc. Table of Contents 1 EXECUTIVE SUMMARY / INFORMATION MEMORANDUM .......................... 3 2 BACKGROUND ............................................................................................ 4 2.1 B USINESS AND PRODUCT DESCRIPTION ............................................................... 4 2.2 C URRENT OWNERS AND MANAGEMENT TEAM ..................................................... 4 2.3 M ARKET AND INDUSTRY COMPETITIVENESS ANALYSIS ............................................ 6 2.4 P RODUCTION AND OPERATIONAL STRATEGY ......................................................... 7 2.5 U SE OF PROCEEDS .......................................................................................... 7 3 FINANCIAL ANALYSIS AND PROJECTIONS .................................................... 8 3.1 H ISTORICAL FINANCIAL ANALYSIS ....................................................................... 8 3.2 K EY VALUATION ASSUMPTIONS ......................................................................... 8 3.3 F ORECASTING OF FUTURE PROFITABILITY AND CASH FLOWS .................................... 9 3.4 C OMPANY VALUE USING THE V ENTURE C APITAL METHOD OF VALUATION ................ 11 3.5 P EERS COMPARISON ..................................................................................... 12 3.6 P RE MONEY AND P OST MONEY VALUATIONS ..................................................... 12 3.7 D ILUTION I MPACTS ....................................................................................... 13 4 THE DEAL ................................................................................................. 14 4.1 P RICING AND JUSTIFICATION ........................................................................... 14 4.2 T YPES OF SECURITIES AND KEY FUNDING TERMS AND THEIR JUSTIFICATION .............. 15 4.3 P ROPOSED EXIT STRATEGIES ........................................................................... 16 5 TERM SHEET ENERKEM INC ...................................................................... 18 6 CONCLUSION ............................................................................................ 19 7 APPENDIX 1 .............................................................................................. 20 8 APPENDIX 2 .............................................................................................. 22 9 APPENDIX 3 .............................................................................................. 24 10 BIBLIOGRAPHY ....................................................................................... 30
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Mintpond Consulting Enerkem Inc. 1   1 Executive summary / information memorandum This report provides information for venture capitalists that are looking to evaluate Enerkem Inc. as a possible investment. The following pages contain information relating to the current and future financial position of the firm. The key methods of analysis employed include: SWOT comparisons; historical financial analysis with relevant financial ratios; valuation assumptions; revenue projection models based on statistical observance; the use of net present values and internal rates of return; and the Venture Capital method of valuation. The report also takes into consideration the limitations imposed on an early stage company such as Enerkem. Valuation assumptions are used conservatively, and as many variables have been assessed as possible, in order to present the most accurate depiction of the firm. The results of the data analysed show Enerkem is expected to deliver exceptional returns to investors, despite existing in the third round funding or bridge-to-IPO stage. Based on a realistic series of calculations the share price of Enerkem is estimated to be $17.75 post-dilution, and $24.83 pre-dilution. The firm aims to raise $125,000,000 in venture capital funding, and plans to exit through IPO or potential acquisition, depending on the market situation. The requirement for funding stems from Enerkem’s plans to build a number of new waste management plants over the next decade. These plans are essential for the firm’s strategy. The associated benefits, especially economies of scale, represent a true competitive advantage that Enerkem expects to maintain indefinitely. Throughout consideration of the company there are several key risks and merits reflected in the investment opportunity. A breakdown of Enerkem’s market position is available in the SWOT analysis, however the most important of these features are the company’s relatively unproven financial history, and the nature of its product.
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  • Three '12
  • ZHANG
  • Venture Capital, ........., Enerkem Inc, Mintpond Consulting

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