You are the owner of a graphic design firm that has a number of high-end clients. Your business started up last year and is financed by three angel investors. Your initial pro forma showed that you were going to be very profitable and return a maximum of $5 million to the angel investors within five-to-six years. The angel investors expect a return of 14 percent on their investment and originally invested $1 million in your startup. At this rate, the net present value (discounted cash flow of the future returns) was $3.8 million (Present Value of future discounted cash flows).

Write a 1 2 page report in a Word document that includes the information below:

1. Beyond the financial performance, you want to be able to demonstrate to the angel investors that the venture is progressing well on a quarterly basis. To do so, you want to create a scorecard of measures that demonstrate that the venture is expanding and growing. What type of balanced scorecard would you create? What measures would you track to demonstrate that the venture is successful and building momentum?
2. After the first year, so far so good, you have signed on some new clients that show great potential and met the targets of your scorecard. That said, it looks like you will have to expand staff and buy some high-end equipment to satisfy the needs of the new clients. You estimate you will need an additional $2.2 million from investors to carry you through the next two years. With the new investments and competitive pressures, you are estimating a new cumulative, discounted cash flow return to investors for the five-year horizon of $4 million (this would represent a node on the Innovation Accounting decision tree. Is this still a good investment for the investors? Explain and articulate any assumptions.
3. You have now completed Year 3 of your venture and met many but not all of your scorecard targets. Investors have contributed $3.2 million to-date. You are finding that you will need an additional $2 million from investors before reaching your breakeven, when internal operations will generate enough cash for the business to be self-sufficient. Your revised five-year discounted cash flow analysis shows a value of $4.3 million (new Present Value of discounted cash flow a new node on the Innovation Accounting decision tree). If the future is as predicted, will this represent a good investment for the angel investors? Be specific as to why. What are your options?