Newco

1.

In the initial startup phase, NewCo could use bootstrapping methods to launch and promote the website. NewCo could create a working website with a large customer base in order to test the market and adjust the product according to the demands of the nutritionists and “patients”. They should do so before turning to the VCs or CVCs, as their specific domain requires the website to be tailored to the clients’ needs rather than the needs of the VCs and CVCs. Thus, initial bootstrapping will allow the company to grow in a way that focuses on the product and their clients. NewCo can expand with outside capital after that. Another source of funding that would interesting for NewCo would be business angels. Indeed, NewCo does not seem to have background experience in the industry. In these conditions, the expertise of a business angel throughout the growth of the startup could be precious.

NewCo states that, in the future, they plan to deploy health evaluation tools. This would likely require large amounts of capital that couldn’t be acquired through bootstrapping methods or through friends and family. During this time, the company would require quantities of investment that could only be provided by VCs or CVCs. Being a company that is associated with health and thus the medial sector, NewCo would likely benefit most from investments from a big pharma corporate venture that would not only provide the money they need, but also the market access and resources to create, market, and deploy the health evaluating tools. An investment by a big pharma corporate venture could also be beneficial in terms of reputation and to the investor as the could negotiate a deal to gain access to NewCo’s health data.

2.

We believe that the concept is unique in its way of linking nutritionists with clients and the way it integrates technology to add value to the nutritionists’ services. In the past years, interest in nutrition has spiked and there seems to be a market for this product. However, nutrition also tends to follow trends and controversies which can be an obstacle to the implementation of the product. The integration of complementary services could aid to overcome that obstacle. Additionally, bigger medical firms may outperform NewCo because of their organizational knowledge, finances, technologies and reputations: NewCo would be small fish in that ocean as soon as those bigger companies take an interest in their concept (and replicate it). It is to be noted that NewCo’s lack of connexions and background experience is an issue: they don’t seem to have an “unfair advantage”.

Concerning the market size and anticipations, we believe that they are too ambitious. With no former visibility, little connexions and no partnerships expecting to grasp 30% of the Swiss Market and 15% of the French market within 2 years might be too optimistic. However, if we look at the profitability of investment (and thus assuming that the company will reach their market share goals), it is appealing. With the value of the share going from 923$ (post-investment) to 1980$ in 2018 (exit time), NewCo aims to double the share value in only 2 years. It seems to be a very profitable investment, but considering that only about 20% of investments end successfully, it corresponds to an expected return of 18.32% which remains interesting.  A year after the investment (2017), the firm is already profitable and the worst-case scenario generates more cash-flow than the investment. All past losses are compensated with one year of profit.

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