Strategic Analysis of Brandon Capital Partners - RMIT ACCT2279 Report

This report provides a comprehensive analysis of Brandon Capital Partners, an Australian venture capital firm specializing in the healthcare sector. The study is divided into two main parts: industry analysis and company report. The industry analysis utilizes Porter's Five Forces model to assess the competitive landscape, highlighting the increasing competition and the need for innovation. The company report examines Brandon Capital Partners' value chain, performance measures using a balanced scorecard, product/service costing, cost-volume-profit analysis, budgeting, information systems, and sustainability. The analysis identifies areas for improvement, such as talent management, key performance indicators (KPIs) for employee performance, and the use of business analytics for data-driven decision-making. The report also provides recommendations to enhance Brandon Capital Partners' strategic positioning and operational effectiveness within the venture capital industry.

BRANDON CAPITAL PARTNERS
Strategic Management Control Systems
Business Report
[Brandon Capital Partners]
Muzamil Hussain s3760574
Xin He s3696080
Joseph Alshaer s3695836
Mohammad Kabir Hossain s3765161
Lecturer: Dr Hui Situ
Tuesday 2:30 pm Class
RMIT University

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Executive summary
Venture capitalists provide the required fund to start-up ventures. They normally charge more
than the banks for their service as due to the presence of huge risk factors in a start-up venture.
This study is also about an Australian venture capitalist “Brandon Capital Partners”. Brandon
Capital Partners is one of the leading venture capitalists in Australia. It assists in ventures that
are solely presentable to the healthcare sector.
This study is divided broadly into two parts. The first part is oriented with conducting an
industry analysis for Brandon Capital Partners. The analysis shows that the Australian venture
capital industry is fiercely competitive.However, the number of competitive firms have
increased. The Industry Analysis suggests the need to boost the innovating capabilities and adopt
various strategies to appear more attractive to entrepreneurs as compared to major venture
capitalists in Australia.
Under the company analysis of Brandon Capital Partners; its value chain operations,
performance measures, pricing model, cost-volume-profit analysis, budgeting, information
systems overview and sustainability are being studied. The analysis of all these areas suggested a
few areas of improvement for Brandon Capital Partners. These are managing talent by recruiting
the most relevant people and providing them appropriate training on new skills, identifying KPIs
to measure the employees’ performance, and using business analytics to ensure real-time access
to huge pieces of data and drive making data-oriented decisions.

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Table of Contents
1. Introduction 3
2. Part 1: Industry Analysis 4
2.1 Porter’s Five Forces Model 5
2.1.1Threat of New Entrants 5
2.1.2Bargaining Power of Suppliers 6
2.1.3Bargaining Power of Buyers 6
2.1.4The Threat of Substitute Products or Services 7
2.1.5Industry Rivalry 7
3. Competitive Strategy 8
3.2Competitive Base 8
3.3Target Market 9
4. Part 2: Company Report 10
4.1 Business Primary Activities 10
4.2Value Chain Analysis 11
4.3Performance Measure using balanced Scorecard 13
Financial Perspective 13
Customer Perspective 14
Internal Business Processes 14
Learning and Growth 15

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4.3Product/service costing 15
4.4Cost-Volume-Profit Analysis 17
4.5Budgeting 18
4.6Information System 19
4.7Sustainability 20
Conclusion 20
Recommendation 20
References 22

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1. Introduction
The existence of venture capital firms like “Brandon Capital Partners” is a response to the
growing need for a body,that provides financial support more specifically to a startup venture.
Firms can broadly be divided into a few distinct categories. Out of all these types of firms, start-
up ventures in particular face problems in sourcing investment for their entrepreneurial ventures.
These firms generally do not receive loans from banks as due to the presence of high-risk factors
in such ventures. When this happens these ventures are left with few options like venture capital
firms to source the required investment (Brandoncapital.com.au 2019). Brandon Capital Partners
currently manages four funds: AUD$230 million MRCF BTF; AUD$200 million Medical
Research Commercialisation Fund (MRCF 3); AUD$51 million Medical Research
Commercialisation Fund (MRCF IIF, LP and MRCF Trust) - now fully invested; AUD$ 50
million Brandon Biosciences Fund 1 (BBF1 IIF and BBF1 Trust) - now fully invested
(Brandoncapital.com.au 2019).
The main purpose of this study is to conduct an industry analysis for Brandon Capital
Partners. Besides, the study also assesses how accounting information and other types of
information are managed here.

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2. Part 1: Industry Analysis
This section assesses the industry in which Brandon Capital Partners operates using the relevant
management models.
2.1 Porter’s Five Forces Model
2.1.1Threat of New Entrants
The positive financial trend of this industry will attract more entrants. The initial capital outlays
are pretty low because wages are the main cost component and they do not need to spend too
much on purchasing expensive equipment and materials. Also, the revenue of this industry is
$414 million in 2019 and is projected to increase by 19% at least (IBISWorld 2019).
Figure 1: Venture Capital Industry Statistics
(Source: IBISworld.com.au 2019)
However, first-time funds and brand image remain the most obvious barriers to new
entrants. With the early stqges of the start ups the people who are knkown to invest in the VC
fund are found betting in to the team as much as possible keeping their investments on main
focus. it can also be ssaid that when the evaluators wwil be found evaluating the funds, they will

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be able to find the track records of the investors. This will help them to detect it out whether they
have chosen right organization to invest or not. However few of the investors are following the
blanket rule which helps them tracking down the past records and evaluate the team dynamics.
Therefore the role of the VC is to analyze the past record and find out the best client among the
pool, convincing them and later on working with their money to provide returns to the
stakheoldrers of the company. With these process executions in mind the emerging managers of
the organization also are involvyed in building up the brand with them which might be build both
as a firm and as individual partners (Hernandez,2014).
2.1.2Bargaining Power of Suppliers
The Venture Capitalists or the VC firms are known to fund all different type of organization
starting right from the biotech to te dotcom organizations. It the present dayts the VC is also
funding businesses which deals with peer to peer finance organizations. The VC organization is
known to plan their working by opening up a funding zone where they collect the huge amount
of money from thhe high net worth incoming individuals and other multinational organizations.
They then ahnd over the fund to the small start up institutions. According to the analysis from the
Global venture funding company ithas been found out that the VC investment has reacged to
more than $53 billion of dolalars making more than 2,658 deals. It has also be found out roml
further research that they are slowly growing in their segment and raisng more and more fund.
2.1.3Bargaining Power of Buyers
It has been found out that the buying power is quite low. According to the information collected
byKPMG (2019) shows the capital invested in a business at a later stage is consistently higher
than the early stage. Venture capitalists and VC firms all prefer investing in a business at a later
stage because there is a great deal of uncertainty about the company’s future. Also, a fund
manager isknown for making various types of decisions regarding the investemnets from the
individuals and the organizations. They are also kwno to make relevant requirement after
analyzing the guidelines for the programme. In Ausstralia taking the example of Biomediacl

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Translation Fund ( BTF) which is not known to provide automatic capital to the organizations.
the organizations thus hav eto satify few of the criterias whicha re listed below:
 Majority of the employees who aare working in the organization and the assest involved
by the organization should be present in side the country. They also will have too use the
whole initial investment within the boundary of the country.
 the average revenue which is earned by the ccompaany should be less than $25 million
every working year (Australian Government 2019).
Figure 2: Global median deal size ($M) by stage (2012-2019)
(Source: KPMG 2019)
2.1.4The Threat of Substitute Products or Services
There are a few similar services in the market. In Australia, the top 12 VC firms have
their investment priority. For example, Telstra Ventures that is known to focus majorly on the
technology which is used in the market and other types of startup and high groing potentials
individuals. The Brandon Capital is known to specialize in boosting the growth of the company
and thus improving the overall medical outcomes based on life science firms. (Hassell 2019).
2.1.5Industry Rivalry

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As the teams are getting developed day by day the market is also developing to see
saturation in the area of VC in the case of various types of investment made. `1(KPMG 2019). In
Australia, the main competitor to Brandon Capital is GBS Venture Capital Firm which manages
over 400 million-dollar funds and has recently started investing in medical devices and
diagnostics related firms (Hassell 2019).
3. Competitive Strategy
3.2Competitive Base
On a broader aspect, two factors make up the competitive base for venture capital firms in
Australia. These are the number of deals they win, and the amount they spend every year on the
infrastructural development and the operations (Zhelyazkov and Gulati 2016). The industry is
becoming fiercely competitive as due to the decreasing number of deals in 2019 (Zhelyazkov and
Gulati 2016). The venture capital firms are left with fewer deals to compete for. The below-
mentioned statistics confirm what is being stated here.

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Figure 3: PE (Private Equity) & VC (Venture Capital) Deal Value
(Source: Cox Pahnke et al. 2015)
The statistics shown as above indicates that the deal count has plummeted for both PE
and VC. However, the spending has maintained a similar trend as that of the last year.
Now, in such business circumstances, the one with better capability to attract investors
and win a deal as well will have the maximum opportunities. Brandon Capital Partners will have
to keep investing in innovative ideas to enhance its capability in information customization.
Information customization will help to understand the demand and give standout offers to clients
(Galloway et al. 2017). Brandon Capital Partners is one of the leading venture capital firms in
Australia. The emerging business demands as stated in this section appear achievable for
Brandon Capital Partners considering its history of expertise in the VC industry. However, there
are many other firms also possessing equally good or even better strategic capabilities than
Brandon Capital Partners. Hence, Brandon Capital Partners will expectedly receive tough
competition from the likes of One Ventures, Square Peg and GBS Venture Capital Firm in terms

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of innovation excellence, infrastructural development works and strategic objectives towards
clients’ demands (Galloway et al. 2017).
3.3Target Market
In the venture capital industry, firms are very selective with their clients. They do it to
keep their horizon of knowledge limited to a few sectors. It also helps to have good measures or
calculations of probable risks in the target market. The wider the area of operations is, the more
knowledge of the areas it will require. The Brandon Capital Partners offer its services to Biotech
and Pharma ventures. It offers venture capital assistance to thehealthcare sector. It does
notprovide venture capital solutions to industries like intangible technology, consumable goods,
non-consumable goods, agriculture, resources, and property and infrastructure. Brandon Capital
Partners is one of the leading science venture capital firms in Australia. It invests in quality
medical science in ventures that promise to offer potential and improved medical outcomes. It
enjoys excellent access to academic and research institutions, which helps it to apply venture and
seed funding to innovative life science-based companies. Besides, it provides knowledge on the
industry and operational expertise to innovative science ventures (Wuebker, Hampl and
Wuestenhagen 2015). The clients of Brandon Capital Partners can be categorized into three
distinct categories. These are Seed Capital, Early Venture and Growth Venture (Hoenig and
Henkel 2015). Brandon Capital Partners currently manages more than three funds raised after
2008. The company has a presence both in Australia and outside Australia. In Australia, it has
offices in Sydney and Melbourne. In the United States, Brandon Capital Partners has offices or
presence in California and Palo Alto (Hoenig and Henkel 2015).
4. Part 2: Company Report
4.1 Business Primary Activities

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Figure 4: Business Primary Activities
(Source: Hbr.org 2019)
The figure above shows the primary business activities of Brandon Capital Partners and
who the main players in the venture capital industry are: entrepreneurs who need funding;
investors who want a high rate of interest; investment bankers who need companies to sell; and
Brandon Capital Partners who make money for themselves by making a market for the other
three.
Brandon Capital Partners usually protects themselves from risk by co-investing with other firms.
There will be a lead investor and a number of followers. It is very rare for a VC firm to finance a
company entirely. Brandon Capital Partners currently have two or three main groups involved in
most stages of financing such as AustralianSuper (Brandoncapital.com.au 2019). They provide
financial support to emerging life science companies with high-growth potential. Such
relationships effectively provide further portfolio diversification - that is, the ability to invest in
more deals per dollar of invested capital. The presence of several VC firms increases credibility
and decreases the workload of the VC partners by getting others involved in evaluating the risks
during the due diligence period and in managing the deal.
4.2Value Chain Analysis