2. Mention 3 qualities that makes an ideal angel investors for PunchTab! 3. Stur

Question

2. Mention 3 qualities that makes an ideal angel investors for PunchTab! 3. Sturiale says that deal terms are irrelevant, why? Do u think it determines how wealthy entrepreneurships will be? What does he mean by that statement? 4. If you were Kamaran, what would you do? A. Raise seed w/ Vc? B. With angels? C. Skip seed investment and raise series a? Why?


AMANA NANDA WILLIAM R. KERR LAUREN BARLEY PunchTab, Inc. It was February 2011, and Ranjith Kumaran, cofounder of Menlo Park, California-based startu PunchTab, Inc, smiled as he recalled the recent online New York Post article "$150,000& A Dream The article illustrated the entrepreneur-friendly nature of the current financing environment and the creativity investors were using, to gain access to early-stage companies. (See Exhibit 1 for article.) Kumaran felt fortunate to be starting a company in this environment. He recently left his first startup YouSendlt to start PunchTab, an Internet-based turnkey customer loyalty program for website owners, mobile application developers, and brands. PunchTab's free service allowed these web-based entities to reward their users with redeemable loyalty points for desired actions they took on their sites, including making purchases, visiting a site daily, and sharing the site's content on social networks. With his cofounder Mehdi Ait Oufkir, Kumaran had just launched a private PunchTab beta site. The initial results were strong, and Kumaran felt it was time to focus on funding the company's operations and growth. However, he knew that the fundraising landscape was markedly different than when he raised his initial funding for YouSendlt seven years ago. He was a more seasoned entrepreneur, and there were many more sources available for seed funding, including individual angel investors, super angel funds, incubators, and seed funds inside traditional venture capital (VC) firms. As he contemplated how best to fund PunchTab, he wondered when he should raise his first round of funding, how much he should raise, and from whom he should raise it. Ranjith Kumaran FNCE 3477-Basic....xlsx cin Book.xlsx.html Cindy Book.xisx.htm 5 years 10 years 30 years F4 FS F7 FB 10

Explanation / Answer

Ans 1:

Following are the three primary reasons for differences in situation between now and while starting YouSendIt:

Ans 2:

Following are the three qualities that makes an ideal angel investors for PunchTab:

Ans 3:

According to Sturiale, deal terms are irrelevant because the profitability for the entrepreneur from the project will be through right market size and the right people involved with the project. People who are diligent, committed, patient, and supporting would lower various risks to the project and ensure growth resulting inflow of wealth for the entrepreneur.

Ans 4:

If I were Kumaran, I would have chosen to fill the round with angels, including one or two super angels. The reason behind this selection is that even though Kumaran has to accept a lower cap the angels are more involved in the day-to-day support for the project. Also, they have the experience to work with early-stage projects and can bring a different perspective to the project making it an overall success. Waiting to raise a Series A round can prove risky as Punchtab is an IT project and continuous advancement in technology could have made the concept outdated or the rivals might replace it with their product. Involving VCs at an early stage might prove risky as they tend to retract their support if things go wrong even slightly.

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