Engineering Economics CASE STUDY ANALYSIS: You be the VC 16.1, page 650. COMPANY
ID: 1123682 • Letter: E
Question
Engineering Economics CASE STUDY ANALYSIS:
You be the VC 16.1, page 650.
COMPANY: Buzzy
Business Idea: Create a device that helps relieve the pain and anxiety associated with getting a shot and other needle sticks like IV starts, blood draws, and finger pricks.
Pitch: While no one looks forward to getting a shot or finger prick, some people are so afraid of the experience that they are literally needle phobic. Needle phobic people are so fearful of getting a shot that it keeps them from donating blood, getting immunizations like flu shots, and receiving regular health care. Buzzy founder Amy Baxter, an emergency room physician and pain researcher, found herself dealing firsthand with this situation. Her son had a really bad shot experience and became needle phobic. She knew right away that she had to do something so her son would no longer be afraid to go to the doctor and receive appropriate treatments. After some research and experimentation, and aided by a $1 million grant from the National Institutes of Health (NIH), Dr. Baxter invented Buzzy, a beeshaped, palmsized device. Buzzy operates on a pain management theory called gait control. Researchers have long suspected that various kinds of sensory simulation could actually interrupt pain signals traveling up the spinal cord, before they reach the brain. After experimenting with different kinds of stimulations, Dr. Baxter settled on a combination of cold temperature with highspeed vibration The cold and the vibration crowds out the pain caused by a shot by literally sending stronger motion and temperature sensations up the nerve pathways than are produced by the pain. It's kind of like rubbing a cut under co c water or the dentist jiggling your check before giving you a shot. The vibrating bee attaches to thin ice packs that look like wings. The device is then placed between the injection site and the brain to block the pain from the injection. It also blocks the burning sensation that some medications cause after a shot is administered. Buzzy's efficacy has been verified by independent testing and research. Along with helping people who get an occasional shot, Buzzy is particularly beneficial for people who must receive regular shots as the result of a chronic condition. Buzzy is sold to doctors' offices, hospitals, and clinics. A fully FDAcompliant version is also available for home use and is priced at $39.95. The home version can be used by people who inject themselves as part of a physiciansupervised home health care regime, or can be taken to the doctor's office when the need for a shot is anticipated. The Buzzy device is reusable.
1. Based on the material covered in this chapter, what questions would you ask the firm's founders before making your funding decision? What answers satisfy you?
2. If you had to make your decision on just the information provided in the pitch and on the website, would you fund this company? Why or why not?
Explanation / Answer
Would like to know the cost, price and profit per unit of output and whether there are increasing returns to scale or constant returns to scale. Further would like to know how much market share the company is expected to supply,, how much capital the owners contributory, for how many years patent has been granted, interest coverage ration, current ratio
2 No I will first get advice from experts in medical field and also experts who keep eye on stock market and various, announcements of companies, it's competitors, those who follow business news, etc.
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