Venture Capital Investment and Growth in Teuer Furniture Business

This report analyzes the potential venture capital investment in Teuer Furniture, a company aiming to expand its furniture business. It employs the Seven Domains Analysis to evaluate market attractiveness, industry conditions, and the company's competitive advantages. The analysis considers factors such as expanding into new regions, increasing production, accessing international markets, and improving supply chain management. The report also explores strategies for increasing sales and profits in Teuer's new stores, including pricing strategies, value enhancement, long-term planning, and cost reduction. It concludes that strategic investment and management cooperation can lead to significant growth and increased profitability for both Teuer Furniture and the venture capital investors. Desklib provides past papers and solved assignments to help students.

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VENTURE CAPITAL INVESTMENT
Student’s Name
Course
Professor’s Name
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Venture Capital investment
Analyze the opportunity available to Teuer Furniture using Seven Domains
Analysis
Venture capital describes a type of private equity or even a form of financing offered by
organizations to a small organization to facilitate their growth. The idea of business funding aims
at increasing the high development potential. Some of the organizations which offer financial
support are those who have demonstrated extensive growth mostly in the number of employees,
and also the annual revenue. Venture capital companies seek equity from the growing companies
when they invest in them. They make an investment in the firm and in lieu obtain a shareholding
in same. While investing, venture capitalists organizations take on the threat of financing risky
start-ups.
The motivation behind the financial support is that they hope some beneficial companies
will thrive well and emerge successfully (Lerner, Hardymon and Leamon, 2012). Financiers follow
certain criteria on giving out the funds for the new business. When raising the cash, they do it in
phases whereby, they start with initial stage whereby the business is funded at the first stage
considering the idea and feasibility of the business. The growing business is mostly from
different industries such as furniture that have potential in the business world.
In the venture business process, there is a specific model which helps the company to
make the right decision. The VC investors Company which is willing to cooperate with Teuer
Furniture may consider utilizing the Seven Domains Analysis technique which will assist them
in making good decision for the investment process. Seven domain analysis is a business
analysis model to identify available and the feasibility of business during investing process. For

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our case of Teuer Furniture will be a benefit in specific ways if Seven Domains Analysis was
utilized in evaluating the venture.
Teuer Furniture is engaged in the fruitier business. A lot of her customers are local and
only accessible in some regional places. However the management may decide to increase the
production and the profit margins by opening new stores in other regions. The idea of partnering
with VC Investors Company to boost the business to higher levels will facilitate good
opportunities and evaluate the increased value of the company.
According to Seven Domains Analysis tool, it shows that Teuer Furniture will get access
to the larger market domain. The tool focuses on several aspects of the business which help in
evaluating the venture. The market will be more attractive for Teuer Furniture because a lot of
funds will be utilized in expanding the business. By opening six more stores the name of the
business will grow, and many people around the state will know about the furniture company.
The availability of the name in the industry may create interest for the customers to visit the
stores for purchase. This approach will increase the revenue in the company and facilitate further
development of the company.
In addition, the market attractiveness which is a factor checked by the VC investors
company, will also increase and bring more money in the company. The timber furniture
segment in the wooden furniture industry is big considering the number of customers’ quantity of
sale and the value of sales (Dimov and Milanov, 2010). The future furniture market is dominated
by valuable species of timber like teak besides mahogany that poses attractive color as well as
grain. This characteristic has made most people like purchasing furniture products with such
beautiful features. Micro business also holds the benefit of accessing natural durable equipment

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of most hardwoods timbers around the forest that make competitive in making products ideal for
external applications, like decking as well as outdoor furniture. Through the Seven Domains
Analysis technique, Teuer Furniture will benefit through these aspects.
Also, Seven Domains Analysis technique shows that Teuer Furniture will benefit through
the increased supply of the furniture products all over the world when the administration
collaborates with the VC investors Company. Traditionally, the company has been supplying the
products within the domestic areas as well as regional timber markets. Nevertheless, regional log
manufacturing has declined gradually over the past few decades as a result of unsustainable
logging and legislature restraining logging of natural woodlands (Mwobobia, 2012). The company
will benefit from accessing international market supply and stop depending on the small regional
markets which are highly governed by the government. New stores opened in different regions of
the country as well as countries will facilitate the growth and development of the business even if
a single region is limited in transportation and selling of the products.
Teuer Furniture will get access to large industry domain which is more attractive. There
are some factors which define profitability of furniture products such as bearable natural forest in
different areas of the state. The investing company will facilitate access to supportive forests
which will provide a consistent supply of products. The VC investors company may also
facilitate the growth and development of private commercial plantations with a higher value for
timber production. Such an approach will enable a continuous supply of timber products in the
market which will, in turn, return a lot of capital to the company.
Concerning Seven Domains Analysis approach, Teuer Furniture will poses sustainable
advantage of a market of the furniture products with the support of the investment company.

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Factors concerning the competitor advantage and techniques are factored in at this point. Teuer
will acquire the best sources of furniture exports to other countries. Such an advantage will
maintain the company strong within the domestic region as well as external areas which have
provided consistent demand and growth over the previous few years.
These advantages will facilitate the development and growth of the two companies to
higher levels. The investing company will gain equity, and the furniture company will grow in
different regions and increase her profit margins. Such a technique is both beneficial to the
investing company as well as the running business company (Muhammad and et.al., 2010). It is an
approach worth of consideration when a macro business aims to grow. The idea of organizational
cooperation helps in developing each company in different ways, and there must be good
cooperation in the management as well in the business running activities.
2. Reasons for increased growth of sales and profits in Teuer’s new stores.
7 Domain framework
Market attractiveness: Furniture market is very attractive. This is because with passage of time
many new hotels and resorts are opened as well as people income level also enhanced. Hence, it
can be said that market is attractive in nature (Kramer, 2011). Teuer’s interest is to make healthy
profit and grow competitive in the market. Then the best strategies for increasing the profits
should be defined and implemented successfully. The secret remains in different areas. Business
professionals define such areas to be, increasing the product prices. Teuer stores may have
considered this factor in the new market whereby they have increased the prices and maximized

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the returns. There exist many of roadblocks. Some of them could be emotional, and stress in
implementing the simple strategy.
The restraining factor to the cost point for any furniture products from a micro
business is almost always within the brain of the organization owner. There is at all times a
resistance to multiply prices because of the trust that everyone buys on price especially home
decor. Statistically, a very low percent of customers purchase on price. Such results mean, the
majority of customers make buying decisions grounded on value. When the furniture products
are of high quality and value, the customers are most likely to buy them and increase the profit
margin of the company as they enjoy the comfort of valuable goods at their homes.
Sector market benefits and attractiveness: In the market there are benefits and lots of attractive
factors. As people have perception that if product price is high then quality will be good. Hence,
by taking advantage of this perception huge benefits can be derived by the firm (Korteweg and
Sorensen, 2010). If the business lacks value, the company may run bankrupt because there are
many identical products selling in the market and everyone has the freedom to make a choice
based on price. Expensive products in most cases express a certain degree of value in it.
Customers perceive when the products sold by Teuer Company are sold expensively; they are of
high quality. The key technique which the administration of the company might have taken is not
only to consider increasing prices but re-releasing existing furniture products with extra value
besides then providing them to the marketplace.
The increased process can apply in a variety of businesses, but in the furniture
industry, it can work best. The marketing team in Teuer might utilize the idea of conducting a

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survey on customer requirements and listening to them. The technique helps in understanding
their frustrations, desires and wants. Such feedback from the customers is very important, and it
helps when incorporated into the business to improve business strategies and refinements in the
organization. Increased business strategies could contribute to adding value to furniture product
and also lead to increased profit.
Another technique that Teuer marketing team might have utilized is the idea of
think of long term tactics. When the investment company partnered with Teuer, the management
was united and new business strategies defined. An increase of six new stores mean increased
business profit and long-term business plan. Long term investment come with long lasting
techniques of running the business. In addition to the idea of having extended strategies, the
management might have decided to cut expenses an approach which will suddenly multiply
profit margins.
Industry attractiveness: Long term investment and planning means a business planned for
more than one year. Such strategies involve looking at the business needs. The market demands
and the opportunities are also some factors considered in the long term plan. There no strange
bullet, besides an investor need to take the approach on a step by step basis. In over-all, an
individual need to consider a hard approach at the company besides the market. Marketing team
need to think of a way to become unique in the market. Long term plans for furniture business
Teuer company stores have been unique and the best in the different regions they have been
stationed. Such techniques have made it be more attractive to the customers and increased
profits.

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Moreover, Teuer chain of stores could have considered the issue of reducing the
number of employees. Mass employment means much salary budgeting. The amount of money
utilized in the development and the expansion of new business are used in paying the workers.
The stores can be managed and run by few employees who are willing to work for long time
hours because they are motivated. Few employees are easy to manage and can be paid well and
even given dividends in the times of extraordinary profit records. Increased dividends could
have caused the marketing team to reach many customers and pitch the business using the new
and aggressive strategies which include the many of customers in the relevant stores. By
following this strategy cost per sq. foot can be controlled and revenue can be increased in the
business.
Sustainable advantage: Firm have its own USP and same is attractive designing of the furniture
and availability of same at different price range. These two points make firm different from its
rivals.
Connection up down across value chain: As part of value chain there will be manufacturing
plant where furniture’s will be produced. Firm office, manufacturing plant and warehouse will be
located in different locations. All raw material will be transported to manufacturing plant where
same will be processed and send to the warehouse. From warehouse same will be transported to
different locations.
Mission aspirations and propensity of risk: There is a very high propensity of risk in the
furniture business because there are number of rivals in this industry. Due to this reason it is very
difficult to operate business in the relevant industry. Main mission of the current project is to
earn sufficient of return on the invested amount. The massive layoff may have subsidized the
salary budget with extensive marketing training and publication of the furniture business. Cost-
cutting measures are very important in any business. The administration focus on motivating

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employees can mean a lot of good returns in the business. This approaches could have
contributed to the building of noticeable agile, fast, as well as a unique market leader.
When the investment company merged forces with Teuer, it opened doors for
reaching out other companies for partnership. The idea is worth because it involves asking the
correct requests off the bat. The reach of the company may appear great, nevertheless if the
constructer cannot produce huge quantities of furniture promptly, and investor may lose larger
deals just because he is not able to deliver. Partnering involves bringing forces together
regarding capital investment, idea generation and management strategies. This technique
obviously contributed to the tabulated results over the subsequent years of Teuer’s furniture
business operation.
Ability to execute on CSF: Critical success factor of the business firm is the unique models that
they are offering in the furniture’s to the customers. Because customers are getting wide variety
of options there is a high probability of achieving huge success in the business. Firm is able to
execute CSF because it have well developed infrastructure of machines that help employees in
carving wood in to different furniture’s.
Business should never opt for minimal quantity production to cut costs. By doing
such, customers will understand the difference besides an investor may lose much businesses
compared to any amount of cash reserved in the process. Teuer took the best strategy of taking
the time to look for a trustworthy as well as an efficient manufacturer to do business with. Also
in partnership, the companies may have contributed money to automate the operation. Office
automation leads to a reduced inventory cash budget. The money to be utilized in the purchase of
inventory could be used in the purchase of other business products. Some advertisement tools
relevant in the furniture business could have been utilized to reach even the customers in the
rural areas.

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3 The Venture Capital Valuation Methodology is a technique used to reveal the
exchange of shares with venture capital firm in lieu of obtaining initial investment amount from
same. The tool needs the approximation of the ultimate selling amount of the furniture product in
the new opened stores in few years to come in order to do venture capital valuation (Dimov and
Milanov, 2010). They would like to test the return on invest amount after some time. The venture
capital firm will use the formula stated below in order to calculate the amount of cash they will
expect after investing in Tueur Furniture. The formula involves dividing the investors
anticipated return on investment
Terminal value ÷ post-money valuation = return on investment
To get the store expansion plan capital we device the total cash flows of the seven years in order
to get average of the capital required.
Store expansion plan
budget
2013 2014 2015 2016 2017 2018 2019
-$1,612 -$3,358 -
$4,465
-
$3,254
-$427 -
$2,596
-
$4,627
Total -
$20339
To get the average we divide the total capital by number of years after investment
Average capital investment 20339
7 =−$ 2905
To get the current status of Tueur Furniture we check average of the net income of the company
at the appendix 2. Present value formula is not used in the table given below because past year
values are taken in to consideration.

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Net income 2012 2011 2010 2009
14.9 15.5 8.4 -4.2
Total 34.6% 4=¿ 4
Terminal value ÷ post-money valuation = return on investment
$ 2905 ÷ 4=$ 726
The Return on Investment is $726, this means the Venture capitalists can invest in the business
because it is able to return a lot of funds. Moreover, a strategic management approach need to be
taken to ensure that the anticipated Return on investment is realized. However, the money may
fail to return and profit after pumping them in the business stores.
To ensure good results are realized, the venture capital enterprise will need to invest
some of her best skills and management tactics to assist in developing good business systems.
Proper management may be required to monitor all the new stores to ensure proper marketing
and financial reporting after some days. With such monitoring approaches, the managers and
officials on board to foresee the success of a store will work effectively, develop good
management strategies and motivate employees.
Venture capital methodology is followed in the current report in order to perform
calculation. Under this first of all past year figures are taken in to account and thereafter
estimation about cash flows is made. Initial expenditure that need to be made are also estimated
for varied years and average of same is computed. Thereafter, return on investment is computed
and along with stake is also calculated by using appropriate formula.

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4 To get the evarage of return for every store we take the anticipated cash flow devide by the
number of years. After the evaluation we will multiply the answer by the number of stores to be
put up which is 6
20339
7 =$ 2905
$2905×6=$17430
The expected stake to invest will be $17430
This will be the amount required to set up all the six expected stores.
5. Recalculate the VC stake in Q4 if the Management Options are issued.
10
100 ×17430=$ 1743
The available stake for the managers will be$1743
6. The role played by Venture Capitalist in creating value for the existing Teuer shareholders.
In any business venture capitalist aims at gaining profit in the investment. For such a
case, they contribute to the success of the business by taking part in different roles. The merging
of the two companies should result in the improvement in production and capital realization for
the Teuer Company. When the VC investors joined the macro company, their role was to take

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part in providing an experienced team of board members. The team officials could seat in the
boards of business talks to negotiate and develop plans for the future improvement of the new
stores. The board members could seat monthly to evaluate the progress of the business. New
decisions could be met. Planning of how to invest in new stores was facilitated by the presence
of bright ideas available on the board.
With an experienced board of directors, Teuer Furniture got new marketing strategies
which could help in reaching many customers. Availability of multimillion customers meant
increased revenue. Advertisement techniques which were found in different media stations,
publications and even word of mouth in the remote regions facilitated the growth of the
combined venture to realize much capital. Media stations have a higher ability to reach a big
audience. As a result, people from far distances could understand the availability of Tuer
Furniture which offers quality goods at a better price.
The marketing manager in the board poses a mandate to present a report to the board
members on the best strategies for marketing the furniture products and also suggesting the best
media places advertise the product. In addition, the funds required for marketing the furniture in
different places is presented to the board to discuss the amount they would spend.
An executive meeting which comprised of Tueur and VC investors also provided an
opportunity to meet best business strategists who can develop business strategies and develop
best organizational policies governing the business and also the industry. With such bright
brains, the new stores could be run effectively without any failure. The staff qualified in
environment matter could describe the best strategies to follow so that the company will not be
prosecuted or burned by the government by violating the environment act of the government.

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Through capital venture calender, the members meet quarterly to evaluate any each investment
approach and receive reports on the new government release of the policies concerning the
industry. The board members monitor the operation of the business in different regions of
investment.
Another role which could be played by the venture capitalist in the combined venture
could be the assistance with funds. When the Tueur merged efforts with VC investors, they
created an extension of the network for fundraising in support of business running. The existing
investors could wish to see upticks in assessment. As a result, the investors who could visit the
company could contribute to the raising of money. In addition to the available, venture capitalist,
new investors from different organizations such as non-governmental organizations could assist
the growth of the new stores. The extensive network could facilitate improved revenue in
different stores around the country and at the end improve the profit margins.
When such high profits were realized, the shareholders could benefit from the venture by
accessing company resources and sharing dividends. Sharing of the funds and profits lead to
motivation of the stakeholders and even think of the strategies of increasing the business to other
areas of interest. When the stakeholders were happy, they could push more capital into the
furniture business and increased the investment capital. New stores could be opened in many
regional areas. Moreover, the shareholders will receive huge amount of dividend when firm will
earn huge amount of profit in its business. Motivated employees tend to work and perform better
that those who are not motivated.
Venture capitalists are the best persons to consider when it comes to the issue of raising
funds. They assist in profiling the business name and its operations in the market. They have the

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capability of profiling other Venture Capitalist firms to make an investment syndicate that can
support many companies. For such reasons, businesses lean to venture capitalists to seek
assistance regarding finances to grow their business. However, the venture capitalists benefit
from the investment through the acquisition of shared equity of the business.
To improve the business process in a venture, a venture capitalist can take a role of
helping the growing company in the recruiting process. Capitalists are known to be good entities
in the business world. As a result they have gained a lot of experience in interacting with
different employees and charring different meetings of people who work in diverse industries.
Their interaction with people of different characters and professions can help them in selecting
the best person relevant in a certain position. When the two companies decide to open a new
store, they may announce the recruitment post for a person with the required skills in that post.
During the interview day, they participate in the questioning process of the employee.
Also, during the recruitment process, they may advice the human resource manager of the
best techniques and criteria of selecting the best candidate. Venture capitalists in most cases they
happen to have participated in different recruitment boards. In those forums, they can meet with
potential employees competent in different industries. They can call the friends who can take
part in the best available position in the newly opened stores. They also have a chance to interact
with other people who are recruiting for their companies. Such avenues help in developing the
relevant skills and understanding how to deal with different characters of people.
Besides, venture capitalists retain a huge contact record of senior talent. Large firms keep
bullpens of particular executives. One of them could be a starter to take-off a business.

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Moreover, they may have a setup individual to get the business in top shape for better
sale. Also, they can face a closer who can guide an organization through the marketing. When
the business is combined, the organizational owners are saved the hassle of looking for talented
people who can take develop a startup business to maturity or even set the enterprise for the
marketing of personal dreams. People talented in different areas can be selected to boost a new
business and realize better results regarding capital return. Also, those retired employees can
offer a word of advice to the new employees on how to run the business to meet the competitive
advantage in the industry of operation.
Part 2
2.2 Reflective Statement on the top challenges facing the financing of new
business initiatives.
When reflecting on the furniture busies, in different nations, we realize that some
opportunities are not well explored. However, there are many individuals in the business world
who poses the ability to pay the cost of business investment. Such results indicate available
challenges existing in the nation or in the society which is preventing them from venturing in a
business opportunity. The global entrepreneurship summit held in different countries in different
years has reported that most of the entrepreneurs face the lack of capital to start up business.
Some people with grate ideas cannot set up their private business, yet they have adequate
knowledge in business in line with their profession. In most of the developing countries, small as
well as medium-sized enterprises poses a lot of development potential. Nevertheless, they face a
mired challenge of capital.

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Additionally, participants in business lack proper training in the operation of the business.
Some individuals poses great ideas on how to develop certain products, but they lack the
capability of developing proper strategies of running the business they are interested in. In
adequate knowledge in some field may result in poor performance or even risk to other human
life especially if an entrepreneur is dealing with business related to human life. University and
other training institutes should pump more resource in training qualified students and business
people who can develop business strategies and run it alone.
The government policies governing different industries mostly affect interested
candidates in the field. In some areas such as medicine, the government offers legislations to
govern the standards and quality of services offered. Such legal acts are good because they cover
the development of businesses. However, the targets put down to achieve so as to run such a
business are very high, and also the processing of the documents take a long time. Such factors
limit some potential entrepreneurs from achieving their entrepreneur goals.
Infrastructure in a country may limit the development business initiatives in most of the
developing nations. The issue of transportation network affects a lot of business activities
running in the market. Improper transport networks like roads and rail hinder the transportation
of goods and services from one place to another. Such factor mean if a company were doing
transportation of products, it would not be able to transport large quantities as they may wish
because of poor transportation means.
The absence of electricity and increased fuel prices poses a negative impact in the
business world. When the electricity bill increases or fails, some industries which produce huge
amounts of product may not a product such products. Also, the fluctuation of fuel prices impact

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the transportation means by making it difficult for the companies and individuals business people
to fuel all their available vehicles to transport goods. Some challenges exist and emanate from
the government officials. Some officials are very corrupt, and they are accused of embezzlement
of public funds. The funds intended to facilitate the development of small businesses is take to an
individual for private benefits. Also, some countries experience insecurity within the
communities and such factors may result in improper business operation. Individuals fear the
attack or even demolition of the firm. In the current report furniture business is discussed in
detail and same is analyzed in detail. In order to analyze the furniture market lots of research is
done on the market and that basis entire work is carried out.

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REFERENCE LIST
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Mwobobia, F.M., 2012. The challenges facing small-scale women entrepreneurs: A case of
Kenya. International Journal of Business Administration, 3(2), p.112.
Muhammad, M.Z., Char, A.K., bin Yasoa, M.R. and Hassan, Z., 2010. Small and medium
enterprises (SMEs) competing in the global business environment: A case of
Malaysia. International Business Research, 3(1), p.66.
Kramer, M.R., 2011. Creating shared value. Harvard business review, 89(1/2), pp.62-77.
Korteweg, A. and Sorensen, M., 2010. Risk and return characteristics of venture capital-backed
entrepreneurial companies. Review of Financial Studies, 23(10), pp.3738-3772.