2. Give three reasons why venture capitalists are interested in the overall sect

Question

2. Give three reasons why venture capitalists are interested in the overall sector?

3. As a venture capitalist, would you invest? Why ? What would you change your mind?

4. Whom should Ryan and Shayne approach for financing?

Chrome File Edit View History Bookmarks People Window Help 13% CWed 11:01 PM a E O blob:https://hbsp.harvard.edu/a3d50fd5-8db4-4ba7-96ad-f91a3c4ba0a1 Harvard Business Publishing venture FEED Resource Recovery 1 16 FEED Resource Recovery It was the spring of 2006 and Shane Eten had just won a $20,000 sustainability award at the highly competitive Rice University Business plan competition. Shane was already thinking about how he would use the $20,000. This wasn't the first time his idea, Feed Resource Recovery (feed), had won or placed well in a business plan competition -he'd finished 2 at the Babson College, 2nd at the University of Colorado, and 2"d at UC-Berkley competitions. Although the prize money and services in kind were helpful, Shane knew that he couldn't successfully launch his business on prize moncy alone. Shane cstimated that hc would nced $150,000-$250,000 to build the anaerobic digester prototype and much more money after that to scale production and sell the system across the country. Where would he get the money? Based upon his success in the business plan competitions and through strong personal networking, Shane had talked to several venture capitalists and they all expressed strong interest in the business. Potential investors seemed to be coming out of the woodworks, but still Shane was uneasy. How much of the company would he have to give up if he was going to secure their investments? Even from his preliminary conversations with the venture capitalists, he knew that the valuation of the company was only going to be part of the problem. He was discouraged by the grim prospect of having to jump through hoops, answering the venture capitalists endless list of questions. He figured it would take at least six months of battling back and forth over cquity and shares during which time the venture capitalists would be looking over his shoulder, and all this before a prototype was ever built. Furthermore, several of the venture capitalists were saying this is a great idea, come back when you have a prototype built," so Shane wasn't even sure if VCs were really interested or just talking. But what other choice did he have? How could he raise the substantial amount of funding that he would require to assemble a team and build a working prototype? And how could he accomplish all of this without giving up all rights to his idea? The task was daunting and the answers were scarce.

Explanation / Answer

1. What is your assessment of the feed resource recovery business for the short and long term

1. Feed Resource recovery business has a potential idea and has good scope for the short term and long term. Since it is modern and new technology based idea in environmental interests, it has to be further developed through research. There are less resources available as it is path breaking idea and to have a successful business based on it, there needs to be financially practical plan.

2.Venture capitalists are interested as it gives them the opportunity to be pioneers in an emerging industry and gain expertise and experience in technologies which have potential in future and are favorable to environmental interests. There are grants and aids by government to encourage and recognise initiatives in this area.

3.As a venture capitalist, I would wait the idea to be further evolved as I do not have much knowledge and resources to develop and make it a successful business venture. I would gather expertise and experience to become more confident about ways to make it successful and have a long term scope across industries on small and large scale.

4. Ryan and Shayne should approach research funds and facilities by technology institutes who encourage such initiatives and can link to angel investors who are interested to promote such technologies and ideas. They can also connect with large business in this industry to collaborate with them and finding scope of growth.

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