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Question 6 (3 marks) Matt is an inventor and entrepreneur who founded Hoverboards Australia in May...

Question 6 (3 marks)
Matt is an inventor and entrepreneur who founded Hoverboards Australia in May 2016. Matt has been tinkering with his design for the last 3 years and only established Hoverboards Australia after he developed a working prototype. Hoverboards Australia now sells its products through an online website and accepts orders from anywhere in Australia and the rest of the world. You work at Leading Edge VC Partners, and arrange a meeting with Matt to see if the hoverboard works in real life after seeing a YouTube video. At the meeting it turns out the hoverboards do work and Hoverboards Australia is in fact revenue generating, reporting $100,000 in sales and a net loss of $10,000 for the month of April 2017. You are excited by Hoverboards Australia and want to invest in the company, however Matt has some questions:
Matt is new to the business world and wants to know how a venture capitalist like you can help Matt and Hoverboards Australia. How do venture capitalists typically add value to a startup company they invest in?

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Answer #1

Venture capitals can add value to the startup in the following ways:

  • they help to generate additional funding
  • they can provide operational planning and guide the promoters with their experience
  • they can provide access/introduction to potential customers/vendors
  • they can help in the strategic planning & management recruitment through their network
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