Prompt

You are an expert in venture capital and private equity. Additionally, you are highly skilled in instructional design, particularly in crafting case studies and learning materials for graduate-level courses. Your task is to create a mock start-up company and provide a detailed overview, which will serve as the basis for a case study in an MBA course on venture capital and private equity. Use the following as a guide for the content you create:

Types of Information Presented:

Company Overview:

Basic Information: Start with general information about the company, such as the name, legal structure, headquarters location, and primary industry. Include details about the business status (e.g., startup) and ownership status (e.g., privately held).

Description: Provide a brief description outlining the company's core business activities and value proposition. 

Employee and Contact Information:

Employees: Indicate the number of employees, offering insight into the company’s size.

Leadership Team and Contact Information: Include the name of key personnel, such as the CEO, along with their contact information and the company’s primary office address. Give details on the leadership team, their background (education, qualifications) as well as their strengths and weaknesses.  This should be able to provide information about how the leadership team is relative to other startups in the same industry.

Financial Information:

Key Metrics: Include critical financial metrics, such as total revenue and the amount of capital raised. These metrics are essential for understanding the financial health and valuation of the company.  No valuation data at this point.

Income Statement: Provide an overview of the company's revenue for a specific fiscal year.

Size of the Market: Provide some degree of detail about the size of the market.  What is this startup’s relative position compared to other companies providing similar products/services?  What is the growth potential for this startups relative to the industry in general and other competitors in this space?

Deal History:

Fundraising Rounds: Detail the company's fundraising history, including dates, amounts raised, types of financing (e.g., angel investor, grant, venture capital), and the investors involved. It should be VERY early stage, so mostly pre-seed, seed, and MAYBE series A.  

Cap Table History: Include information about the company's capitalization, including types of preferred stock and the ownership percentage of different investors.

Competitive Analysis:

Competitors: Include a comparison with similar companies, showing their financial metrics, headquarters location, and last financing details. How competitive is this space?  Is it very crowded?  Is there room for a new entrant to grow and succeed? 

Differentiation: What is the difference between this startup and the other competitors in this space?

Growth and Performance Signals:

Growth Rate and Size Multiple: Present growth metrics, including quarterly growth rates and size multiples.  This should be used to compare the company’s performance against a larger dataset of companies.

VC Exit Predictor: Provide a predictive analysis of the likelihood and type of exit for the company, leveraging algorithms and historical data.

Marketing and Sales Channels:

Marketing: Who are the primary customers? Is the startup targeting the right market segments? What channels (e.g., digital, direct, word of mouth) is the startup using to acquire customers? Are there strategic partnerships, influencers, or early adopters that the startup is leveraging?  Does the startup have strategies in place for customer retention and engagement (e.g., loyalty programs, content marketing, social media presence)?

Sales Channels: Is the startup relying on direct sales (e.g., an internal sales team, e-commerce) or indirect channels (e.g., distributors, retailers)? Does the startup have a well-trained and motivated sales team?  Are the current sales channels scalable? Can the startup expand its reach without significantly increasing costs?  

Product and Technology

Product: Give specific details about the startup’s product and how it improves upon existing products in this industry.  What are the risks associated with this startup’s product?

Technology: Does this startup use any unique technology?  If so, what is it?  What are the risks with this technology?  Does it have any patents?

Investor and Debt Information:

Investor Details: Include information about the investors, including their type (e.g., venture capital, private equity), the amount they have invested, and their status (e.g., new or follow-on investor).

Debt Summary: Provide details of any debt financing, including the amount and the lenders involved. There should be little or no debt as this is a very early stage startup.

Risk Factors:

What are the risks that the company faces?  Focus on risks that are typical for a startup: competitive risk, technology risk, execution risk, regulatory risk, operational risk, market risk, funding risk, etc.

Pre-money valuation: What is the median pre-money valuation for other startups in this same industry or sector?

 Guidelines for Presentation and Formatting:

Structured Layout:

Organize the document in a highly structured and modular format, with each section clearly labeled and segmented. This allows for easy navigation and quick access to specific information.

Tabular Data:

Present quantitative data, such as financial metrics, deal histories, and competitor comparisons, in tables to facilitate concise presentation and easy comparison.

Highlighting Key Metrics:

Highlight important figures, such as total revenue, median valuation for industry, and employee count, at the beginning of relevant sections to make critical data readily accessible.

Use of Percentiles and Multiples:

Employ percentile rankings and size multiples to provide context to the company's performance relative to a broader market, helping investors and analysts assess the company’s potential.

Visual Summaries:

Use visual elements like percentile rankings and growth rate summaries to distill complex data into more digestible formats.

Factors:

Most importantly, for the purpose of the students’ scoring and evaluating the company using the Payne Scorecard Method, make sure that the following factors are clearly identified and expressed for the simulated startup but do not include actual scores for each dimension.  Please provide a summary for each factor but the score should be quantified by the student based on their evaluation of each factor below and their analysis of all of the above specified information about the simulated company!

• Strength of the Management Team

• Size of the Opportunity

• Product/Technology

• Competitive Environment

• Marketing/Sales Channels/Partnerships

• Need for Additional Investment

• Other

The students should then be able to evaluate the startup, come up with an approximate valuation, and determine whether or not – and if yes, how much – to invest.