This is a manufacturing business designing and making bicycle components in the United States (at a 50%gross margin) and selling them to Far Eastern bicycle assembly companies. This will be a very difficult business to finance with venture capital. It will require fixed assets to establish the manufacturing facility. The working cap ital needs will probably be crippling because the business will need to purchase parts, make the components, and ship the product to the Far East. Only at some stage after that will its Far Eastern customers pay. It will still have product development overhead.

All in all, this is one of the most difficult types of business to finance, and it will be very hard for it to earn a high return on investment.

Why is this business ugly to venture capitalists?

Although margins are relatively high (on an accrual basis) why is this not attractive? (Hint; think of what the margins are on a cash basis.)

What is likely to be they're biggest cost spend category? How could they finance this if venture capitalists won't?