CP2201 Assignment 3 (Money Talks!

) 2 Sep 2019
(Prof Francis Yeoh)

Part 1

Check out the web site and other information about Insignia Ventures
Partners and Golden Gate Ventures. Answer the following questions:

1 Name 2 companies invested by Insignia and describe their

business in 1-2 sentences.
Carro Singapore's first subscription-based car service, and also and online
marketplace to sell/buy used cars.
Youtrip A mobile financial platform that supports over 150 different
currencies without additional fees and comparable exchange rate.

2 Name 2 companies invested by Golden Gate and describe their

business in 1-2 sentences.
Carousell An online marketplace that allows users to buy and/or sell goods
Sampingan Help companies by connecting them to a network of selected and
trained freelance agents who will complete tasks by pay-per-performance

3 If you run a startup company that needs venture capital to scale,

and assuming you have a choice, would you rather be funded by
Insignia or Golden Gate? Why? (50 words)

Both VCs have their strengths but I would rather be funded by Golden Gate as
their pride themselves that specialize in internet and mobile startups hence they
would have much experience in that area that would help my startup.

Part 2

Do some research on angel investment and venture capital and answer the
following questions.

4 Who bears a higher risk when investing in startups – the angel or

the VC? Why? (50 words)

The angel bears a higher risk when investing. A VC often will be more
involved in the investment and would work with the founders whereas
angels merely provide financial support hence there would be a higher risk
since there is lesser support for the startup.

5 Who bears more risk - an entrepreneur running a startup or a VC

investing in one? (50 words)

An entrepreneur running a startup bears more risk because VCs are professional
investors that have loads of experience in building a startup which therefore give
them the advantage due to the know-hows whereas an entrepreneur does not
and hence may be more prone in making mistakes hence bearing more risk.
 6 How does a VC make money? What is the most attractive
compensation mechanism in the VC industry? How does that
work? (50 words)

VC normally charge management fees for professionally managing the assets of

the startup and also take a share of the profits earned. Taking a share of the proft
earned is the most attractive compensation. Whatever the startup earned, the VC
would take a percentage of it like a royalty.

7 Watch the video: ‘Venture Capitalists mitigate risks’

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2847
Read the short paper in the LumiNUS file folder, ‘The 11 Risks
VCs Evaluate’ by Tomasz Tunguz.

From the 11 risks identified, what do you think are the 2 biggest
risks that Aida Technologies and Shopback face? Explain your
choices. (80 words)

Financial Risk. Aida Technologies and Shopback and trying to enter a new
market hence huge amount of resources will be needed for research and
development, educating the public and scaling will be needed hence risk is
significant.

Market Timing Risk. As mentioned earlier, both are trying to enter new market,
hence VCs would have to do their homework to find out if the market is ready for
the 2 companies new ventures.

Submission Instructions
Please submit your answers in Word or PDF format to the CP2201 LumiNUS
folder ‘Student Submission’, sub-folder ‘Assignment 3’. Please use your name as
the filename of the document. The deadline for submission is 1830 hours 2
Sep 2019. There will be a grade penalty for late submission or for answers
exceeding the word limit set.