pls if anyone can just help me answer question 3) what are the inplications on valuation for the different sources?

Case FEED Resource Recovery 1 It was the spring, and Shane Eten had just won a $20,000 strtaimability award at the highly competitive Rice University Business Plan Competition. Shane was already thinking about how he would use the $20,000. This wasn't the first time his idea, Feed Resource Recovery (feed), had won or placed woll in a business plan competition-he'd finished scoond at the Babson Collese, second at the University of Colorado, and second at the UC-Berkeley competitions. Althouzh the prize money and services in kind were helpful, Shane knew that he couldn't successfully launch his business on prize money alone. Shane estimated that he would need $150,000$250,000 to build the anaerobie digester prototype and much more money after that to scale production and sell the system across the country. Where would he get the money? Based on his success in the business plan competitions and through strong personal networking, Shane had talked to several venture capitalists, and they all expressed strong interest in the busimess. Fotential investors seemed to be coming out of the woodwork, but still Slane was uneasy. How much of the company would he have to give up if he was going to secure their investments? Even from his preliminary conversations with the venture capitalists, he knew that the valuation 2 of the company was only going to be part of the problem. He was discouraged by the grim prospect of having to jump through hoops, answering the venture capitalists endless list of questions. He figured it would take at least six months of battling back and forth over equity and shares during which time the venture capitalists would be looking over his shoulder, and all this before a prototype was ever built. Furthermore, several of the venture capitalists were saying. This is a great idea, come back when you have a prototype built," so Shane wasn't even sare if they were really interested or just talking. But what other choice did he have? How could he raise the substantial amount of funding that he would require to assemble a team and build a working prototype? And how could he accomplish all of this without giving up all rights to his idea? The task was daunting, and the answers were scarce. From Athlete to Entrepreneur: The History of Shane Eten Shane Eten was born in Philadelphia and lived in a number of places while his father attended medical school. The family eventually settled in Cape Cod. Massachusetts, where his father and mother started a family-owned medical practice. Living near the sea inspired Shane's father. Myfather built a saiboat in our back yard. He started when I was in sixth grade. He told me he was going to build a sailboot and sail it around the world. He was probably a little crazy, but he actwally built a thirty-six foot trimaran.3 For as long as Shane could remember, his father had a dream of building the sailboat. He would wake Shane up early in the morning on weekends and make him help work on the boat, sometimes working 12-hour days. After several years of effort, they successfully launched it and saw it sail. Although at the time I really hated working on that boat, looking back I reahize that it was a very important part of my childhood because it taght me the importance of hard work and taking a dream you have and making it reality. Like many boys, Shane was more interested in playing sports than school. He lways enjoyed the team aspect and the competitive nature that came with thletics. His goal was to play Division I basketball in college. Hampered by knee njuries but still wanting to parsue his dream of playing college basketball, hane chose to attend Trinity College, a Division III sehool, and play ball there. Infortunately, his knees never fully recovered from a series of knee surgeries, so hane never had a chance to play in college. psychology, Shane didn't want to pursue a carcer in the field, but ne dion t kilow exactly what he wanted. I really didn't enjoy school and to contime doun the psychology career path would require me going back to school almost immediately. I like getring out there and getting my hands dirty with real work. In the field of psychology, I would have been doing a lot of research and theoretical education-based work. I wasn't ready for that. I wanted to get out in the world and make something happen. After graduating from Trinity, Shane went on many interviews and eventually found a job working for an up-and-coming computer company, Angstrom Microsystems. Angstrom Microsystems built supercomputers from off-the-shelf components and Linux software. Shane loved working for this fast-growing entreprencurial company because his job was never the same day-to-day. He had the opportunity to work with many different aspects of the business. His original job was working with vendors. Then he moved his way up to product development, and finally he settled in customer account management. While Shane was with Angstrom, the company grew from $500,000 to $15 million in sales in his first eight months. With the hands-on experience he gained and the opportunity of being able to see how so many aspects of a company worked, Shane realizod: Entrepreneurship is fun and, most importantly, comperitive. There's a real science to starting a company. It was at this time that I first started thinking about building my oun company. Unfortunately, Angstrom's success was short-lived as the market took a turn for the worse when one of Angstrom's largest customers stopped growing. The CFO of Angstrom left for a position at a candle company. He called Shane and convinced him to come along for the ride. The position that Shane had been offered was 180 degrees different from his job at Angstrom and an opportunity to test his abilities in a new way. Although Shane liked the tech industry, he decided to give it a shot. So at age 24 be started as a manager of a candle manufacturing plant. It was a drastic change. Laurence Candle Compamy was a 6o-year-old, third-generation company, and I was managing people mostly older than me-some who had been working there for 30 years. He was forced to get on the floor and get dirty learning the process of making candles. The Laurence Candle Company was struggling because its product was very similar to another established brand, Yankee Candle. The company needed new ideas so Shane raised his hand and asked if they would give him a shot at designing a new line of candiles. After doing a bunch of market research and going to trade shows to see what was out there, he launched a new line of candles made from a new type of wax made out of soy. Soy wax was environmentally friendly because the wax was made from an all-natural crop; it was considered renewable and therefore sustainable. The soy wax candle line took off. Not only was soy cheaper than traditional paraffin wax, but also it could be sold as all-natural for 30%40% more than traditional candles. Sales jumped instantly, It saved the company. There was a new consumer emerging at this time, and if you could say that it was all-natural, then you could say that it was sustainable or noble. This new brand of customer was willing to pay a premium for environmentally Shane put in 60-to 7o-hour workweeks developing the line of soy canales. He also started research on adding biodegradable plastic wrappers to the candles. It was at this point that Shane knew if he was going to put in this much time and effort toward an idea, the next time it would be for himself and his own company. Working for small companies, Shane had learned a lot about how the business world worked, but he knew that he needed a stronger foundation in acoounting. and working with numbers. If he was going to be successful in starting and managing his own ventures, he was going to have to go back for an MBA. At 28 years of age, be decided it was time to go back to school. Soon after he applied, Shane was accepted to Babson College. The Clean Tech Industry Shane entered Babson with a goal of finding an idea to launch his own business. He was intrigued with opportunities in the Clean Technology space, especially around combating global warming. Investment and growth in the CleanTech industry exploded in 2007, passing the record set in 2006 in the first three quarters. 4 Exhibit 111 shows an explosive upward investment trend. 5 The increased growth and investment in the CleanTech industry has been brought on not only by the large price increases in gas and other fossil fuels but also by the raised awareness of global warming by prominent figures such as former Viee President Al Gore. Gore's work with the United Nations Intergovernmental Panel on Climate Change, his winning the Nobel Peace Prize, and his involvement in the Academy Award-winning doeumentary An Inconevenient Truth have brought to light the serious issues of climate change and global warming. These works have also brought legitimacy and an increased interest in the CleanTech industry. Taken at face value, the surprisingly entertaining An Inconvenient Truth provides an idealistic, persuasive, and compelling dissection of the perils of global warming. Frightening and timely, the smartly organized documentary is an urgent plea for responsibility and action as well as an impassioned call to heed the ominous warnings of science. 6 Gore's words resonated with Shane. As Gore stated: But along with the danger we face from global warming, this crisis also brings umprecedented opportumities. What are the opportunities such a crisis also offers? They include not just new jobs and new profits, although there will be plenty of both, we can build clean engunes, we can harness the sun and the wind; we can slop tasting eneryy; we can use our planet's plentiful coal resources wirhout heating the planet. FXHIBTT 11.1 Anmual CleanTech Investment. Source: National Venture Capital Association. The procrashnators and deniers would have ws believe thes will be expensive. But in recent years, dozens of companies hate cut emzssions of heat-frapping gases uhhle saving money. Some of the uorld's largest companies are moving aggressively to capture the enormous economic opportumities offered by a clean energy future. But there's something even more precious to be gatned if we do the right thing. The chimate crisis also offers us the chaner to experience what wery few generations in history have had the privilege of knowing: a generational mission; the eadularation of a compelling moral purpase; a shared and umifying cause; the thrill of being forced by circumstances to put aside the pettiness and conffict that so often stifte the restless human need for transcendence; the opportumity to rise. 7 Consumers and the public in general are expecting companies to be more ecofriendly; they want to see real efforts made toward carbon reduction and recycling. "This has encouraged companies to race toward new technologies to capture a piece of this new market. One example of the efforts that mainstream companies are making is Google's recent pledge to become a carbon neutral company. Google toclay announced a new strategic iniriative to develop electricity from reneavable eneryy sources that uvil be cheaper than electricity produced from coal. The netely created inifiative, known as RE