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Financing Methods

Autor:   •  April 10, 2011  •  Case Study  •  563 Words (3 Pages)  •  1,322 Views

Page 1 of 3

Deepak and Erika need to get distribution agreements from different companies. In order to protect their designs from future entrants they need to have intellectual property. Furthermore, to prevent new entrants they should incorporate predatory pricing strategy. Moreover, they need supplier agreements in order to safe guard their position in the market. Finally they should build a network of strong customer base, which will add value to the business, known as network effect.

One of the financing methods available is government grant but this is difficult to obtain. Lev can also go to other software companies in order to get some form of partnership, provided they like his idea. If they cannot afford professional programmers, Lev can try and find various university student programmers who can help them in building the program, as interns. Another options available is getting investment from angel investors and venture capitalists who will give them the capital in return for a share of the company. Lev can also apply for bank loan however, they need a collateral to put against the loan, which they do not have in this moment of time, and so this would not be an option.

Lev can take advantage of bootstrapping and using resources, which would minimise costs. He can also construct a business plan, which includes market study and the financial forecasts such as cash flow analysis and PNL. He can also develop a feasibility analysis to show potential investors the need for the business. He can also take advantage of Guerrilla marketing methods such as cold calling. In order to minimise the initial start up costs, they can start the business from home. To raise capital, Lev should consider having a part time job on the side.

One of the characteristics is that Arnet were first movers in the market, which is their major USP. As Arnet has provided lifetime warranty for their products, therefore Arnet's major USP is reliability. The lifetime


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