VOS Indicator™ Screening-Jen Liu and Larry Mestas are seeking venture investors to help fund the expected growth in their Frozen Yogurt Company venture described in Problems 3 and 4. Use the VOS Indicator™ guidelines presented in Figures 2.8 and 2.9 to score Jen and Larry’s frozen yogurt venture in terms of the items in the pricing/ profitability factor category. Comment on the likely attractiveness of this business opportunity to venture investors.
FIGURE 2.8 VENTURE OPPORTUNITY SCREENING GUIDE: THE VOS INDICATOR™
POTENTIAL ATTRACTIVENESS
FACTOR CATEGORIES
HIGH
AVERAGE
LOW
Industry/Market
Market size potential
Venture growth rate
Market share (Year 3)
Entry barriers
Pricing/Profitability
Gross margins
After-tax margins
Asset intensity
Return on assets
Financial/Harvest
Cash flow breakeven
Rate of return
IPO potential
Founder’s control
Management team
Experience/expertise
Functional areas
Flexibility/adaptability
Entrepreneurial focus
Total points by ranking
Overall total points (OTP) Average score (OTP/16)
FIGURE 2.9 CLASSIFICATION GUIDELINES FOR COMPLETING THE VOS INDICATOR™
AVERAGE LOW
>$100 million
$20−$100 million
<$20>
>30%
10%−30%
<>
>20% (leader)
5%−20%
<5%>
Legal protection
Timing/size
Few/none
>50%
20%−50%
>20%
10%−20%
>3.0 turnover
1.0−3.0 turnover
<1.0>
>25%
10%−25%
2−years
>years
>50% per year
20%−50% per year
<20% per="">
Majority
High minority
Low minority
Industry/market
General/general
Little/none
All covered
Most covered
Few covered
Quick to adapt
Able to adapt
Slow to adapt
Full team
Founder
None
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