Nautir Case Study

After financing an initial study on their own, Kartik and Aravind (K&A) are at a point where they need to raise outside capital to make further progress. K&A were challenged to determine which of the four potential investors currently interested in their venture would be most appropriate for NatuRi's future growth:.

Angel investor

A wealthy individual willing to make a personal investment in an entrepreneurial venture. A principal of a business for whom Kartik had done some consulting had heard about Kartik’s and Aravind’s idea and became interested. This individual is willing to put up $1,000,000.

Pros:

* Such an investor usually invests in several companies. He will probably be less involved in Naturi, will put less demands, and will allow more freedom for K&A in making decisions.

* The angel-Naturi connection will pose less problems on future funding decisions, including exits, than VC or strategic investor relationships will.

Cons:

* Contrary to the usual angel profile, of a person who is much involved in the specific field, it is not clear how much value this individual would add, besides providing capital. For example, connections, or professional knowledge. This is probably not a problem because based on their cvs, K&A and Aravind's parents, basically cover the scope of knowledge & experience needed to be able to make wise decisions.

* The valuation of NatuRi had not been set, so it was unclear just how much equity Kartik and Aravind would have to give up.

Strategic investor (Corporate partnership)

Proteon, a large European food company is interested in a permanent stake in the business in addition to the expected return on investment. Proteon had proposed a license arrangement with NatuRi so that Proteon could begin distributing Rice-Active itself if it partnered with NatuRi.

Pros:

* K&A believed that Proteon would be willing to take a smaller equity position than other firms.

Cons:

* Restricts...