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Good Money After Bad

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Submitted By anandita14
Words 411
Pages 2
Question: Should Harbinson recommend further investment in Seven Peaks?
This case depicts a typical scenario of any venture capital firm which makes investment in an early stage company. The entrepreneur, Jack Brandon, did demonstrate proof of concept with his titanium-alloy technology for cauterizing; but didn’t even define the commercial viability. Further he introduced more complexity by adding a forceps project to the initial cauterizer project. The investing partners will obviously set high targets for the new money that’s being demanded which will in turn sour the 18 month relationship between Christian Harbinson and Jack Brandon. To begin with, it is necessary to answer the following questions
– the opportunity cost of not reinvesting for new project in Seven Peaks, the market size (in units per year), price elasticity, are these premium products that could outsell the existing ones because of superior performance? In my opinion, Brandon should be looking to launch a new and improved version of his cauterizer before exploring the forceps idea. Once it’s a successful product he can consider the cross-selling synergies that would arise from marketing forceps. It has been quite clear that Brandon is not a marketing expert and that why the first product didn’t reach the desired level of success. Seven Peaks essentially need marketing specialists.
Harbinson himself needs to take initiative to develop Brandon’s entrepreneurial capabilities. He ask a time period of say 3 months to fully develop a new proposal for the existing cauterizer project with modifications and then ask the investors for reinvestment. Like many entrepreneurs, Brandon made the mistake of relying excessively on his own feelings about the technology when he launched his first product. Seven Peaks while preparing its modified business proposal, it should answer to questions like what its

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