Dermacare
Autor: 宁 韩 • March 22, 2017 • Case Study • 359 Words (2 Pages) • 558 Views
DermaCare Case Questions
1. Evaluate DermaCare from a Venture Capital investment perspective. Is it potentially a good investment?
It is potentially a good investment. Using DRTV to market direct to the consumer which can differentiate DermaCare from other products like Zeno Zit Zapper. DermaCare has a huge market, with 45 million people in the US alone suffering from acne in a $2 billion a year OTC market. So the future of DermaCare is promising.
With an investment of total $4.15 million, it could lead to a $7.65 million postfinancing venture value, and founders would hand over IP to Dermacare. So, Foundation Capital could have control over DermaCare and its IP. And Foundation Capital would choose M&A, or IPO to exit to gain a significant margin over that.
YES | NO |
Market | competitor |
Unique | Exit route |
FDA approval |
3. As DermaCare, which financing offer would you accept? Why?
Band of Angels | Foundation Capital | |
Total investment | $1,500,000 | $1,000,000 pre FDA $3,150,000 post FDA |
Estimation of total venture value | $4,500,000 post financing valuation | $7,650,000 post financing valuation |
Dilution of shares | 66.7% existing owners 33.3% new owners | 45.8% existing owners 54.2% new owners |
Control | Existing owners have 66.7 voting rights | Two existing shareholders(one is CEO) One outsider and two investors |
Intellectual property | Founders keep IP | Founders hand over to Dermacare |
Exit strategy | Flexible | Complex(IPO,M&A) |
Higher valuation
...