New venture financing

New Venture Financing Fin 509 Case

Overview

According to the Arthur Rock, “Good ideas and good products are a dime dozen. Good execution and good management - in a word, good people are rare. Such type of quote develops good feeling. It completely imitate the opinion of Venture capital investors that good thoughts are easy to acquire and to find people that easily implement thoughts is the fundamental to Venture capital success. Hence, in this paper the discussion would be on the Fishing Equipment Corporation financing requirements and best financing mix for new ventures.

Fishing Equipment Corporation

Seacliff Products offers patented fishing hooks which initially had introduce do-it-yourself-kit. They currently have developed an innovative Supreme hook which is a live bait holder. It is estimated that there would be a considerable demand for such fish hook up in coming years. This product offers people or users with the greater gratification while fishing. The main purpose of the company is to maximize the profit potential for their new product i.e. patented fish hook through licensing and other methods and create more such type of innovative products that are appropriate for the fishing gear market.

Assets to Start Business

Fishing Equipment Corporation has enough assets to start their Seacliff Products. They have around $ 561, 955 assets in which majority part is of long term assets, and have a small portion in current assets as initially when starting a business, there are no debtors but have a start-up inventory portion. Moreover, inventory consists of the material that is needed to develop the final product and portion allotted to it is $ 58,583 is appropriate amount. Whereas, long term assets are concern, equipment and patents has been purchased as the product which will manufactured is patented fish hook (Kathleen R., 2011).

Sales to Support Business Operations

The sales forecast will not support the Business Operations as they have predicted a yearly sales and not monthly sales. In order to support business operation, company should have sufficient sales on monthly basis. Fishing is usually done on seasonal basis but low sales will also occur in other month. As they have projected on yearly basis i.e. one quarter of 25,000 kits will be sold in first year, in second year it would be one third of 25,000 kits will be sold in send year which might not be possible as new company or existing company can bring new and more innovative fishing hook in the market, or they can be possibility that new company introduce same hook with much lower prices.

Hence, this would completely impact on the company's operation. Furthermore, company needs fund for production and other material and for this if monthly sales are not predicable, it would become difficult for them to manufacture the end product. Hence, company current projection from my point of view will not support company's operation. They should research on the current and a monthly sale of the product due to the fact that world is moving so fast and new innovations ...