Group Number: 10

Diptanshu Jain 237

ENV Case Submission Sudhanshu Verma 267
Jasmeet Singh 282

PunchTab Inc.

1. What is your evaluation of PunchTab’s business? Is it an attractive investment

opportunity?

Yes, it is an attractive investment because

1. The idea is of customer loyalty program which many companies want to start
but do not want to spend on the marketing of the same, PunchTab will do the
same for the companies as it is like companies are outsourcing this task to
PunchTab.
2. Kumaran has a lot of experience in starting a new venture and with the number
of contacts he has, and has friends with expertise in various fields who will help
the start up at the various steps of the company
3. Market size of more than $4 billion
As many companies will be attracted to the idea under Kumaran, more investors
will be attracted to invest in the company. The network effect helps here in making
Punchtab a attractive investment.

2. Do you think it makes sense to do a seed round of financing? Why or why not?

Yes, it makes sense to do seed round of financing because:

1. Kumaran has set his seed milestones which requires development loyalty
market, offer based rewards and Punchtab platform, all this would require
funding
2. Provide the start-up with early money which will help the company in setting
up as well as scale up if need comes in near future
3. If there is as seed round, chances are that it might attract VCs at the later stages
of funding but a start-up without seed round may seem unattractive to the VCs
3. What are the relevant differences between angels and venture capital investors
that Ranjith Kumaran should consider when raising money for his venture? Who
would be the best partner for him in the short term? Who would be the best
partner in the long term?

Angel investors VCs

 Invest in small portions from
the money they have saved in
companies
 they usually invest in their own
regions, area of expertise
 and may also get involved in
day to day support of the
company.
 Invest in large portions in
companies
 they invest their money
globally and even those areas
where they do not have
technical expertise
 mostly are not involved in day
to day support

In short run, the best partners are angels because they invest in company and
provide their expertise which can help the company at the start. Also, there is no
risk to company even if an angel leaves as they have other angels to support their
idea. They provide quick money and expertise to the company which is required at
the start phase of the company.

In long run, the best partner are VCs, they normally invest in start-ups who either
have disruptive product or start-ups who have a long-term growth strategy and that
strategy seems feasible, so that if they exit, they are profitable. So, if start-up wants
to be successful, they want huge funding at later phase which only VCs can provide

4. What should Ranjith Kumaran do?

At present Kumaran has 3 options:
1. Include VC in the deal- It is risky to go with this option at such early stage,
because if in between VC loses interest it can be end of the company
2. Fill the round with angels including 1 or 2 super angels
3. Wait for few months and raise Serie A funding: This should not be done
because PunchTab is in IT business where the idea can become outdated
instantly as competitors can use the same idea to build the product and gain the
1st mover advantage and take away the user base of the application
2nd option is the one Kumaran should consider as in this case the company can get
day-to day support from the angels. So, Kumaran should work on attracting the
investors using practical presentations about the forecasted sales and show the high
growth of the company.