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
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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