1. As an investor, would you be willing to invest in Cenabal? (Explain why or wh
ID: 377310 • Letter: 1
Question
1. As an investor, would you be willing to invest in Cenabal? (Explain why or why not)
2. Would you have any concerns? If yes, explain them.
3. As the entrepreneur, would you be willing to accept the offer presented by the two Dragon’s Den investors?
In Case A, MacDonald is faced with the decision whether to accept business funds in exchange for 50% control of the business. In analyzing the case, some issues to consider include: In general, what does MacDonald think the business is worth – that is, what does $200,000 for a 20% share imply? What do the investors think it is worth – that is, what does $200,000 for a 50% share imply? Given the case says, MacDonald had a credible business plan (which would presumably include financial statements) that could be taken as a given although questions should emerge about what you would be interested in gleaning from the business plan in answering the questions above.
It was July 12, 2006, and Jennifer MacDonald was faced with an important business decision. As she pondered the deal presented to her by two investors, she wondered whether it would be wise to give up 50 per cent control of Cenabal, her organic salad dressing and bread dipping oil company, in return for the investors S200,000 business investment offer. Would the investors take control of the company out of her hands, or would they provide necessary capital and useful business experience? JENNIFER MACDONALD MacDonald quit her job as a professional engineer in 2001 to stay at home with her three young children. Her middle son, Ben, developed a severe case of childhood eczema, which prompted MacDonald to look for ways to treat his condition. Jennifer came across the amazing healing qualities of flax oil, and started giving it to her son and taking it herself. Omega-3 Fatty Acid is the healing ingredient found in flax oil. MacDonald realized that the flax oil did not taste very good on its own so she started experimenting with flax oil in her kitchen. She realized that her salad dressing tasted great with the flax oil ingredient added to it. She had discovered a tasty and no-fuss way to allow her family to consume the healthy flax oil and the Omega-3 ingredients. Consumers in general were looking for Omega-3 products at this time. Research indicated that Omega-3 was an essential polyunsaturated fatty acid that people needed for health. Omega-3 was shown to reduce the risk of heart disease, and it was found in flax oil. Eighty-five per cent of Canadians and North Americans were found to be deficient in Omega-3 Fatty acids, and this deficiency was gaining publicity MacDonald observed that several products containing the Omega-3 Fatty Acid ingredient were starting to appear on the market. As timing was an issue, she began developing her business, Cenabal, as a tool by popular which to enter her product onto the market, aiming to do so before other Omega-3 products became MacDonald realized that she had little business experience, but she also knew that she had a great passion for her product and a proprietary process that she had personally developed to deliver a shelf-stableExplanation / Answer
1. Yes an Investor, I would like to invest in Cenebal. Currently, the obesity is on verge of rapid growth in America and Canada, which leads to cardiovascular disease. Omega -3 is good for the heart and keeps it healthy and lately there has been a trend of people buying organic and healthy foods by watching their ingredients, Hence Cenebals produce perfectly fit in this trend, hence it would be a good opportunity to invest in Cenebal.
2 - Yes I would have a concern, Firstly there are many upcoming healthy foods, which are on sale in the market. My main concern would be, How big is that market and how people accept it? secondly, How long it would sustain in the market, It contains Flax seed although healthy, it doesn't taste great.
3 - If I was an entrepreneur then I would not have taken the said offer from the two Dragon investor, giving 50% control in a company in initial stage would mean they would have equal say in any business decisions, I would have to wait for their nod before taking any decision, which would trap my freedom to take new decisions.
Mcdonald values her business at $1,000,000, as 20% is $200,000
Investors value her business at $400,000 as they offered $200,000 for 50%
I would be looking at the Revenues and the profits made, plus the period and product cost, this would give us the idea about the future of the company, plus this would also show that if the money is used in the right way.
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