Strategic Case Analysis of AndFound: Options and Recommendations

This case study analyzes AndFound, an online platform connecting investors and startups. The assignment examines the company's initial focus on growth over revenue, the challenges of a two-sided market, and the dilemma of when and how to monetize. The analysis explores several strategic options, including a talent portal, paid services, partnerships, and token fees, evaluating their pros and cons. The preferred strategic option suggests a balanced approach: maintaining the core free service while experimenting with revenue generation through non-core activities like the talent portal to achieve sustainable growth and maintain alignment with the company's mission. The document provides a comprehensive overview of the case, presenting different options for strategies, and analyzing the appropriateness and effectiveness of the preferred solution.

Running head: STRATEGY CASE ANALYSIS OF ANDFOUND
Strategy Case Analysis of AndFound
Name of the Student:
Name of the University:
Author’s Note:

1STRATEGY CASE ANALYSIS OF ANDFOUND
Executive Summary
This report provides a strategic analysis of the Case of AndFound. An introduction about the
Company, the main actors and the context is provided. The presentation of the problem and
dilemma is discussed. The presentation of different options for strategies of AndFound is
provided and pros and cons of each option are analyzed. The appropriateness and effectiveness
of my preferred solution is analyzed in conclusion section using tools and framework of the
strategy course.

2STRATEGY CASE ANALYSIS OF ANDFOUND
Contents
Introduction......................................................................................................................................3
Presentation of the Case...............................................................................................................3
Discussion........................................................................................................................................3
Presentation of the Problem in the Case......................................................................................3
Presentation of different option and pros/cons of each option.....................................................4
Conclusion.......................................................................................................................................7
The Preferred Strategic Option....................................................................................................7
References........................................................................................................................................9

3STRATEGY CASE ANALYSIS OF ANDFOUND
Introduction
Presentation of the Case
The strategies adopted by an organization should be in alignment with the vision and
values of the organization (Gamble and Thompson 2014). The case is about AndFound, an
online platform for connecting investors with selected start-ups. The main actors of the case are
VV and Reza, the founders of the online platform. The service of AndFound was launched in
2012 and it gained immense popularity among users. AndFound was first started as a blog
which provided entrepreneurs useful information on how to find funding and entrepreneurs soon
approached VV and Reza and were seeking referrals to angel investors. VV and Reza thus
decided to make use of the information collected from investors, for instance the past funding
history of investors and the kind of business they were interested to fund was analyzed. The next
step for VV and Reza was to develop technology for their online platform. This online platform
helped the start-ups to create online profiles like Facebook pages. Investors could search for
entrepreneurs using filter criteria, for instance, they could filter entrepreneurs who have studied
in MIT or Harvard but the services of AndFound was free. Instead of worrying about the revenue
VV and Reza focused on the growth and quality of their business (hbr.org 2017). An
organization must analyze its mission, values and vision before implementing major strategies
(Hubbard, Rice and Galvin 2014).

4STRATEGY CASE ANALYSIS OF ANDFOUND
Discussion
Presentation of the Problem in the Case
Organizations should analyze its current strategies to create operational efficiency and
gain competitive advantage (Harrison and John 2013).AndFound managed to raise seed capital
from angel investors and a foundation, however after the first round of seed funding, the
organization did not raise a single penny. It is difficult to build a two-sided capital like
AndFound which comprises of entrepreneurs on one side and investors on the other side. In the
initial years of business, focus of AndFound was to increase the customer base and improve the
experience of its users. The founders of AndFound VV and Reza were of the opinion that if they
charge money from the users of the site; it would drive away high-caliber entrepreneurs and
investors. They wanted to make their site valuable to the start-up community and had the firm
conviction that they would manage to find some way to fund their business later. But the
problem with the case is that investors prefer to see cash flow potential of a business. On the
contrary AndFound was not chasing revenue, instead they wanted to deliver “best’’ and “free”
services to customers. VV and Reza were stuck in a dilemma about the timing to raise funds for
their business and they discussed about which business model to follow. VV feared that if their
business does not adopt the revenue model, it would not mature (hbr.org 2017). The strategic
choice of a start-up organization is of paramount importance for its success (Hill, Jones and
Schilling 2014). For a start-up organization, the strategic choice is important as the organization
has limited resources (Peppard and Ward 2016).
Presentation of different option and pros/cons of each option
The process of monitoring and implementing strategies are of paramount importance for an
organization (Morden 2016).

5STRATEGY CASE ANALYSIS OF ANDFOUND
Option 1
Talent Portal is a source by which AndFound can generate revenue. A section of the
AndFound site was set up by VV and Reza to connect jobseekers with start-ups. The start-up
organizations could apply filter to select the potential candidates for their organization and
AndFound could make around 2000 introductions every week for 30,000 candidates and this
amount can enable an organization to save around $25000 in recruitment fees per candidate.
However, AndFound provided this service for free but this service can be a source of cash for the
AndFound (hbr.org 2017).
Pros-This option is in alignment with the mission of AndFound to connect investors with
entrepreneurs.
Cons- This business is not a core business of AndFound and the online platform will face
competition from recruitment agencies.
Option 2
VV and Reza can generate revenue from the tools and documents that they have
developed to make the funding process easy for entrepreneurs by connecting them with
investors. Most of the features and services in the online platform are available for free, for
instance, the online platform provides valuable information in the form of blog posts, but
AndFound can set up a paid membership or charge subscription fees from users to access the
services. AndFound has many active and engaged investors and start-ups companies in the site,
VV and Reza should have the confidence that they have already created a sustainable online
platform to connect entrepreneurs with investors and have gained the trust of consumers (Stead
and Stead 2013).Customers are already getting great value from the online platform, so they will

6STRATEGY CASE ANALYSIS OF ANDFOUND
definitely understand the need of AndFound to grow into a sustainable business. Users will
definitely pay for some of the services and features of AndFound if VV and Reza are transparent
about the fees (hbr.org 2017).
Pros- AndFound can take leverage of its Customer Perceived Value and charge fees for
some services.
Cons- Monetization efforts can alienate customers.
Option 3
AndFound has partnered with one broker-dealer so that small investors can easily invest
in micro VC funds rather than individual start-ups. Andound was providing services to customers
as a facilitator without charging any money from them, but it can charge the broker dealer a
percentage of the fees.
Pros- This option can generate revenue for AndFound.
Cons- Paid products can generate less word-of-mouth.
Option 4
The other option is to offer a product that can help angel investors utilize their expert
knowledge by aggregating funding from other angels on the online platform. Each of these
investments could be structured as a separate fund. AndFound can charge a portion of the profit
from the investors when they make money upon cashing out (hbr.org 2017).
Pros- AndFound can learn about customer’s willingness to pay.
Cons- This method can halt momentum of business temporarily.

7STRATEGY CASE ANALYSIS OF ANDFOUND
Option 5
Starting with a Token Fee
The 10,000 users of the site could be charged $ 2.29 a month. Only this meager amount
of money can result in a revenue of $300,000 a month or $3.6 million a year (hbr.org 2017).
Pros- $ 2.99 is a very small amount for the value that AndFound is creating.
Cons- This is only an interim source of operating funds
Option 6
Subsidize one side of the market
AndFound has another option to charge fees from investors but the services for start-ups
should remain free (hbr.org 2017).
Pros- This option can help AndFound experiment with revenue sources.
Cons- This option can’t be adopted as a long-term revenue model.
Option 7
Focus on the product
VV and Raza can adopt the Facebook approach of building a great product first then
worry about revenue later. AndFound has an incredible database of investors, so if they focus on
building a great product, they will find sources to fund their business in future (hbr.org 2017).
Pros- This option is in alignment with AndFound’s vision and mission.

8STRATEGY CASE ANALYSIS OF ANDFOUND
Cons- Without experimenting with revenue options, the business of AndFound can never
reach maturity.
Conclusion
The Preferred Strategic Option
A hierarchy of strategy statements is mission, values, vision, strategy and balance
scorecard (how to monitor and implement the strategy).According to me, for a start-up company
like AndFound which performs in a rapidly growing sector, six months is a century to adopt the
revenue model. Most of the tech companies charge fees from inexperienced entrepreneurs who
try to raise funds for their business like FundersPlatform that charges exorbitant fees from the
entrepreneurs.But AndFound has set up a trustworthy and transparent business platform and
users which include investors and entrepreneurs have been using the site since several years.
AndFound should stick to its mission of making the fundraising process transparent and
providing the entrepreneurs greater access to capital. AndFound has already gained Customer’s
Perceived Value (CPV) and should start testing revenue strategies. The organization can’t live on
seed capital forever. VV and Reza should contemplate on how and when they can introduce paid
features to AndFound. For instance, the best option for AndFound could be to charge fees from
non-core activities for instance, the Talent portal of AndFound. A quarter to a third of a new
hire’s first year salary is paid by Companies to a professional recruiter. So such business
organizations will definitely pay AndFound a fee for similar services. Thus AndFound can keep
its core business free for its users but can make non-core activities like the Talent portal
chargeable. By this process, AndFound will not deviate from its noble mission of connecting
entrepreneurs with investors, at the same time VV and Reza will be able to experiment with

9STRATEGY CASE ANALYSIS OF ANDFOUND
different revenue options on a small scale by targeting segments of users of AndFound. This will
help AndFound to maintain commitment to core business model and generate revenue
simultaneously, because AndFound can’t rely on seed capital forever. This option can enable
AndFound to ignore traditional industry boundaries and product definitions and to focus on
creating value as well as to focus on customer’s experience. AndFound must consider its
perspective (mission), position in the industry, plans and goals and patterns of action for
successful implementation of strategy .The intended strategy for AndFound is to connect
entrepreneurs with investors through an online platform by providing free service. The emergent
strategy of AndFound should be not to commit to a revenue model but to experiment with
interim sources of revenue like the Talent Platform.

10STRATEGY CASE ANALYSIS OF ANDFOUND
References
Gamble, J.E. and Thompson, A.A., 2014. Essentials of strategic management. Irwin Mcgraw-
Hill.
Harrison, J.S. and John, C.H.S., 2013. Foundations in strategic management. Cengage Learning.
hbr.org. (2017). Strategy Case of Andfound. [online] Available at: https://hbr.org/2015/09/case-
study-should-this-startup-take-vc-money-or-try-to-turn-a-profit [Accessed 19 Oct. 2017].
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.
Morden, T., 2016. Principles of strategic management. Routledge.
Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a
digital strategy. John Wiley & Sons.
Stead, J.G. and Stead, W.E., 2013. Sustainable strategic management. ME Sharpe.