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Gourmet Gadgets Inc.

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Submitted By Kalmyk
Words 1115
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This report analysis the feasibility analysis of Gourmet Gadgets for producing and marketing a new invention, pasta server. Gourmet Gadget Inc. is a startup that seeks a venture capitalist for additional funding to start its operations. We have constructed a complete master budgeting system for the company, starting from sales budget to projected balance sheet. We have found that the company will need $85,000 for smooth functioning including expansion of production facility. Based on the above mentioned figures and an analysis of the master budget, we suggest that the company should go for 50% ownership stake and receive $75,000 from Mr. Cohen. By the tenth month i.e. May 1990, however, they will need cash of $8,663 to fund the purchase of two-cavity production mould. Nevertheless, the decrease in production costs due to the new mould increases the profitability as well as cash position of the company.
Case Introduction:
Jointly owned by Ken and Mary Lanzetta, Gourmet Gadgets Inc. was founded in May 1989 to design, develop, manufacture and market the unique household utensil. The Lanzettas have already patented their invention in Canada and United States. They have also applied for patent registration in Europe. Initially, Gourmet Gadgets plans to market its products in Canada, with expansion plans for US, and Europe after the registration of patent.
The Lanzettas have already financed long term assets and patent through personal loans, however, they need additional funding in order to kick start production and pay the dues on production mould. They are unable to get any further debt from bank, hence, they decided to seek venture capitalists. Mr. Arthur Cohen, a venture capitalist, has proposed to finance a maximum of $75,000 for 50% ownership stake in the company. Moreover, for an ownership stake less than 50%, his cash investment will be disproportionately

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