Republic of the Philippines

DAVAO ORIENTAL
STATE UNIVERSITY
“ A university of exellence, innovation and inclusion”

FM 131: Investment & Portfolio Management

“START-UP FUNDING”
CASE STUDY 1.1

Mr. Jay T. Relatado

Faculty

Members:

Rafael Luis C. Pamonag

Rosemarie P. Caintang
Bernadita C. Awe

Bachelor of Science in Business Administration 3A

September 20, 2021
 Case Problem 1.1 Start-up Funding

You plan to start your own company after graduation. Throughout university, you have
been working on a new technology and have done plenty of research for your thesis. In
preparation for graduation, you have already created a detailed business plan. In addition, you
have talked to several potential stakeholders and potential clients and have already designed
some prototypes.

By the time you graduate, you manage to sell some prototypes, and you already have a
group of clients waiting for an even better prototype. You decide that it is now time to invest
in the required production facilities so that your small business can take off. However, you
need financing from institutions and/or individuals to undertake the required investment. You
dig out your business plan to review it and realize that, to present a strong case to convince
potential investors, you need answers to the following questions:

Questions
a. From a practitioner’s point of view, what is the overall picture of the structure of the
investment process?

b. What types of investment are relevant for you as a start-up company? Provide reasons and
realistic explanations.

c. When looking for investment, what is particularly important to you from your founder’s
perspective?

ANSWERS:

A.
Every investor must have a thorough understanding of the investment process before
making any investment. This is because it illustrates the order of events and outlines the many
phases involved in constructing a portfolio, which aids in understanding the investor's risk
preferences, as well as asset allocation and performance evaluation. Investors can use the
structure to better understand the origins of different assets.

Investment Process Framework

Investment Deal
Preliminary Assessment Due Deal Contract
Opportunity Diligence
Analysis and Completion Signing
Screening Structure
The framework for the investment process is as follows:

Investment Opportunity Screening - this comprises creating an on-the-ground (OTT) network,

scouting OTT, interacting with stakeholders to get to know them, and understanding the project
and transactions.
Preliminary Analysis - this stage should take about two weeks. A strategy and business sector
analysis, a business plan analysis, a management and organizational structure analysis, and a
financial analysis are all part of it.
Deal Assessment And Structure - this stage lasts one to one and a half months. This includes
an in-depth examination with management and shareholders, transactional structuring, and the
creation of an investment memorandum for the decision-making department.
Due Diligence - This stage takes the same amount of time as the previous one. This includes
bringing in experts in marketing, business, taxation, accounting, the environment, employment
law, and legal matters.
Deal Completion - this stage includes the completion of transactions based on an assessment
of the economic health and transactional structure.
Contract Signing - This involves drafting a contract with the assistant.

B.
A start-up company needs funds to operate in the first few initial years that is before it
starts generating revenues. It needs to be very prudent and exhaustive in its research before
taking up investment in the market. So based on the need of funds and risk- averse stance until
a sound footing is achieved, the investment portfolio of the start-up companies should consist
of minimum risk and maximum return investments. This type of investment should relevant to
start-up my company is on Bonds market.

C.

From the founder's perspective, when looking for

investment there are a few things to keep in mind;

Letter of intent is a Term sheet is an

document which investment
Research on the has a company's blueprint until a
potential investors, Have a business plan/actions/steps binding document
The exit strategy
and approach only plan ready and the to negotiate or
should be pre- is not prepared. It
those who make amount you want carry out the
chalked out. is a sheet which
sense for your to raise. investment. This has terms of
company. helps the start-ups negotiations in
in the long-run. detail.