Case: “Lovepop”, by Harvard Business School Publishing

Assignment: Analyze this case.  Answer the questions below.  Provide your response in a typed format, no more than 2 pages long, double-spaced.

Individual Effort:  This is an individual-effort assignment, meaning you must write your own paper.

Questions:

  1. Describe the founders’ approach to developing Lovepop. Did Rose and Wise use a “Lean Startup” approach? Cite characteristics of a Lean Startup approach and evaluate whether or not they used this approach. Was their approach effective or not?  Evaluate it.
  • Assume you are an investor evaluating Lovepop. How would you evaluate the founders and the opportunity presented in the case?
  • Assume you are a close friend of Rose and Wise. They have asked for your evaluation of the two funding options (presented by Founder.org and Techstars). These are seed funding options. You can assume that Rose and Wise plan to close a Series A funding round in the future (in the amount of $2M). However, they still need seed funding right now. Which seed funding option would you recommend they take? Why?
    • As you develop your answer, discuss both the price/share of stock which will result (at Series A) depending on the seed funding they take.
    • Discuss the amount of dilution of ownership they will experience (at Series A) depending on the seed funding they take.
    • Discuss the number of shares of stock these offers imply will be given to either Founder.org or Techstars.

Lovepop Case Addendum

Please use the information listed below to compare the offers from Founder.Org and Techstars.

Assume that Lovepop starts with 10,000,000 shares of founder stock. They expect to close a Series A funding round for $2,000,000, where they will give 20% equity of Lovepop to the Series A investors. Their post-money valuation after the Series A round is $10,000,000.

  Founder.org Techstars
Convertible Note amount $300,000 $200,000
Discount 25% 20%
Valuation Cap $3,000,000 $4,000,000
Conversion Trigger $1,000,000 (Series A) $1,000,000 (Series A)
find the cost of your paper