Lightwave Technology, Inc.

Lightwave Technology, Inc. - 1 In anticipation of an IPO...

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1. In anticipation of an IPO, should the cofounders move forward with an additional round of bridge financing? Why or why not? Yes, in order for the cofounders to expand the business and generate more cash inflow in the future they have to get financing. Because in this situation, the company needs fast cash, therefore, the bridge financing, which is a type of short term loan designed for shorter term ( 3 weeks to 3 years typically) until larger loan can be obtained, is the best option available. Moreover, bridge financing will have harder conditions and covenants such as; late payments, penalties if default on payments and charges much higher interest rate comparing to normal loans. 2. How would you structure and price this round, and why? I would structure the prices based on many considerations. First, find out in what stage in the business cycle does the company currently operate; growth, maturity or decline. Furthermore, look at the competitors prices, the price needs to be close to the competitor prices especially before gaining market share and customer loyalty ( growth stage). Other strategy, is to price based on
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