FINS6025 Entrepreneurial Finance

Semester 2, 2024

GROUP ASSIGNMENT (30%)

Due date: 18 Oct 2024 at 23:59

Task Summary:

The objective of this assessment is to apply the knowledge that you acquire in Entrepreneurial Finance in a practical context. You assume the role of a group of founders, working on an exciting new business opportunity. You are seeking to secure funding from  venture capitalists (or angel investors).

Your task is to prepare a business plan, a financial plan and a pitching video that can be sent to investors as a comprehensive funding proposal package.

Learning Outcomes:

At the completion of this assignment, you expected to acquire and demonstrate:

.   in-depth understandings of the resource requirements, success factors, and critical challenges facing young startups

.   the relevant technical skills in making quantitative and qualitative evaluation of a

high growth business opportunity undertaken by a private company at the early stage of its development cycle

.   the ability to apply these knowledge and skills into real a business scenario of your choice

.   the ability to collect and compile important product-market and financial information as well as to produce and present a detailed and convincing financial projections

.   the ability to succinctly and convincingly communicate the merits of your proposed business opportunity to investors

.   the ability to work cooperatively in a group.

Selecting the Opportunity:

Each group can choose between coming up with a completely new business idea OR picking an existing non-listed company. For the first option, imagine yourself founding your company based on the idea. For the second option, the existing company should be less than 5 years old, and you should wind back the clock to assume that you are at day one of the business, when it is still in the development phase.

You should select the idea/company based on whether your interests / expertise / knowledge / aspiration. But it is important to keep in mind that the opportunity must be of substantial scale and growth potential, worthy to attracting initial seed funding and follow-on financing from professional investors (angels and VCs).

If you write about a new business idea, you should assume that the current business conditions (today) apply. If you pick an existing company, you should take into account the business conditions at the time when that business was founded.

Team Format:

The assignment is a group assignment and must be done in groups of your choice of no more than 5 students. We also consider any group with 4 members to be of sufficient size. All students must be in the same tutorial class. If you cannot find a group or find a sufficient number of members by the end of week 3 then you should seek help from your tutor.

Contributions and Responsibilities:

Group assignments can sometimes attract a “free-rider” who fails to make a fair contribution towards the assignment workload. When you establish your group, you should clearly set out the expectations for workload in your assignment plan. All of this information can be used to resolve group conflicts, review individual members’ performance and penalise students who are deemed to have not made a fair and reasonable contribution by the LECTURER.

In order to ensure equity in the group, all groups will be required to complete an assignment plan indicating: (1) the division/collaboration of tasks among group members, (2) the schedule of meetings (including online), and (3) all internal due dates (for each group member and/or the entire group). This must be done in the first group meeting. A template can be found at the end of this document.

The assignment plan must be submitted with the report as attachments.

It is also imperative that you identify groups conflicts and bring them to the attention of the lecturer early (i.e. as soon as they arise) and that records of all communication, meeting attendances, submission schedules, and input documents are kept by each group member. In the event of a serious group conflict, where there is disagreement about individual contributions, the lecturer will adjust the marks individually based on this additional information.

The lecturer will NOT resolve any group conflicts reported within three days of the assignment due date and after the due date. You should set final internal deadlines well before the submission to ensure that there is enough time to put together the final touches.

Writing your Proposal:

The proposal should be written for people external to the company, i.e. investor-centric. It must market the company well and provide investors with the information they need to determine whether they will invest in your firm or not.

The recommended format is:

For the business plan:

a)        Use the Business Model Canvas (see the note at the end of this document) to

summarize the opportunity and the business model (this is intended to serve as a summary page, so no executive summary/introduction/conclusion page is needed). It is recommended that the Business Model Canvas contains hyperlinks to relevant sections which discuss the business plan in detail (see point b below)

b)        Describe in depth the 9 building blocks of the Business Model Canvas in relation to your business idea/company.

For the financial plan:

a)         Identify and justify key financial assumptions developed from your business model (as discussed in the business plan above)

b)        Provide comprehensive cash flow forecasts based on the above assumptions,

including an analysis of net cash burn and cash runway, sales growth rate and break-even point.

c)         Determine external funding requirements for the first 5 years

d)        Value the business based on a combination of methods (e.g., DCF, Venture Capital Method and Valuation Multiples)

e)         Propose to prospective first-round investors the key investment terms and the proforma capitalization table.

f)         Provide the Excel model containing your calculation for verification.

(The business plan and financial plan can be submitted as one document)

For the pitching video:

Record a (maximum) 10-minute pitch to potential investors summarising the business  opportunity,key success factors, financial projections, and principal investment terms.