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Product cover image for Price or Relationship: SecureNow's Dilemma (Portuguese version)

Price or Relationship: SecureNow's Dilemma (Portuguese version)

Ripsy Bondia, Ashutosh Dash

Product #:W28552
Supplier:Ivey/ISB
Discipline:Finance
Setting:India, 2014
Details:Case (PDF) • 13 pages • 2022-05-05

Subjects:

Finance and investing

Industries:

Financial service sector

Geography:

AsiaIndia
Your Price:$10.54

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In April 2014, Kapil Mehta, founder of SecureNow, met with one of his classmates, now an angel investor. The two had recently met socially when Mehta briefed his classmate on SecureNow’s online business-to-business insurance marketplace. Mehta’s classmate was now expressing interest in investing in SecureNow at a valuation of ₹57 million. This valuation was much lower than Mehta’s expectation of ₹500 million. Mehta was confident of SecureNow’s future growth, but he wanted funds to expand. His classmate would provide Mehta with the kind of relationship he was seeking with an investor, but Mehta wondered how he and his classmate arrived at such different valuations. Mehta wondered if he should accept the funds at a low valuation, consider other options, or just postpone his expansion plans.

Learning Objectives

This case is suitable for an MBA course in entrepreneurial finance and business valuation techniques, especially when valuing start-ups. This case will help students appreciate the issues that arise when estimating the value of private companies, especially start-ups which have little financial history. The case provides sufficient data for students to make valuations using a discounted cash flow approach and a multiples approach (using both forward and trailing multiples). By working through this case, students will appreciate the assumptions that contribute to these calculations and understand why valuations will vary when using different methods. This case also presents a platform for students to learn about non-pecuniary aspects of evaluating start-up financing options.
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Case Study: Price or Relationship: SecureNow's Dilemma (Portuguese version) | Ivey Publishing