Lovepop CASE PDF

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Answer of a couple questions of Lovepop case study...

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LOVEPOP CASE 1) High growth potential startups needs have changed during last decades. In the beginning the Venture Capital scheme was simply to fund new business ideas (nowadays largely called startups) giving mainly office spaces, small portions of administrative skills and of course money, requiring small fees. After the big burst of .com bubble, during the 2000ish, the whole sector changed a lot due to lack in reputation. Thanks to what happened a new way of funding emerged, called “seed accelerator”, and it was a big success. It remains even now the newest and most technological form of developing a new company. This new business consists mainly in helping startups giving them a big network of professionals and investors requiring them a fraction of equity for profit purposes. Today markets and bureaucracy are way more complex and even funding projects became way more difficult in various terms; It is indeed needed a stronger and deeper knowledge of many different subjects in order to develop an ideal business plan for new companies which are in a fast pace growing environment. It is for these reasons that new accelerators were born in last 20 years. The particular reference here goes to Y-Combinator and TechStars that implemented new ways of helping entrepreneurs achieving their goals. The underlying idea is that nowadays developing ideas require a way higher level of general knowledge and, most of all, getting straight to success sometimes it’s just a matter of networking and either having the right professionals that advice you. Even if numbers of these companies are kind of different in terms of money raised, they play, at the end, a similar game with all the new papers that arrive each day on their desks. These companies analyze thousands of daily cases trying to understand if, apart from money, their articulated community could generate solutions than in future will be converted in profits. TechStars for example help young entrepreneurs teaching how to manage their own ideas throughout a three-month training program dedicated to new individuals who are putting effort to learn at their best how to run smoothly their businesses. Of course, it is difficult to achieve help by this colossus of startups, but at the end, not only money will flow inside of the companies, but at the same level knowledge and a step-by-step path towards success will be shown (if it is the case); At the end, to analyze deeply the situation, their specific business model make most sense for whose individual that are living kind of small business realities that cannot be helped till the end by many investors, but that are just growing at their pace including also the training of the management and all the employees involved.

2) Qualitatively, as a very early stage company, LovePop has everything that is needed to be attractive. Managed and driven by students without a big preparation was ready to create important numbers considered that the market was constantly decreasing in terms of Total Revenues and that there are 2 giants competing and making revenues for few billion dollars. Even TechStars, an accelerator for technology startups, saw that there was such a great potential for the idea of implementing in greetings cards this kind of new technology. As said in the lecture, it was a simple decision to fund the company for 18.000$ in exchange for 6% of equity. Growth potential in terms of revenues is high referring to the 5% target that could be achieved by commercializing this new product. This kind of opportunities are easier to evaluate than technology only products, which are way more complex to be

studied, because the product itself is already structured and even the market has been there for long times. It is more related to a cultural effect or future transformations. The only really bad perspective is the amount needed in terms of expenses that this kind of companies must sustain in order to achieve a considerable piece of the market. This aspect is really money draining and must be taken into consideration; it is probably one of the first causes that could run the company out of money and, in case of decreasing revenues during times, could take investors to big losses. 3)...