Revolutionary Gear
16 Pages Posted: 30 May 2017
Abstract
This case addresses the natures and relatedness of venture feasibility assessment and due diligence. The situation: a startup to produce and sell a novel plastic bicycle chain, and all-too-familiar personal challenges for its MBA venturers—alternative job and career path decisions. Both entrepreneur and investor perspectives can be taken in assessing this actual student report on a prestart venture. Suitable for either one-day, in-class discussion or an extended team exercise.
Excerpt
UVA-ENT-0010
REVOLUTIONARY GEAR
Hans, let me know if you and Leon are really going to do this, because it sounds really promising. I can see you both making it work and would love to be able to provide you with some start-up capital.
It was late April 1996, and Leon Castro and Hans Markert had just presented their concept for Revolutionary Gear to a panel of their peers at the Atlantic Business School. Their classmates' response had been encouraging and the two friends were now wondering what the next step should be in deciding whether to launch their venture in late May. Both would graduate from Atlantic's MBA program in four weeks. Both had turned down offers from several companies for interesting, well-paying positions. However, Leon and Hans each wanted to run their own businesses, and both felt drawn to a product which, since its first public airing in a February 1995 business school contest, increasingly had occupied their thinking. What had started as “pie in the sky” had become serious business.
At First…
Over the last few years, Hans, a mountain-biking enthusiast, had become increasingly upset with the amount of time he had to spend maintaining his bicycle drive train to keep it working properly, especially during winter. After each ride, he would need to hose the drive train clean, wipe the chain dry, oil each link, rotate the chain a few revolutions, and wipe off the excess. Aside from maintenance, he had gone through two chains the past winter alone: despite his care, they would pick up dirt, get gritty, then increasingly loose. Eventually, a link would twist or break and that would be it. There had to be a better way, he thought; a better chain…
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Keywords: business planning, entrepreneurship, feasibility analysis, new enterprises
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