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Case

Reference no. UVA-F-1304

Subject category: Finance, Accounting and Control

Authors: Bob Bruner (Darden School of Business, University of Virginia); J Chadwick Rynbrandt (Darden School of Business, University of Virginia)

Published by: Darden Business Publishing

Originally published in: 2000

Version: 11 February 2014

Revision date: 15-Apr-2014

Length: 11 pages

Data source: Published sources

Topics: Corporate financial strategy; Entrepreneurship; Venture capital; Financial forecasting; e-Commerce; Accounting and control; Relevant cost analysis; Finance

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Abstract

In July 2000, two founders of this new web-hosting company are contemplating raising $5 million to $15 million in a second-round financing from venture capitalists. The task for the student is to forecast the firm's cash receipts and disbursements in an effort to determine the firm's 'burn rate' (ie, the rate of cash consumption and how long the financing will sustain the firm). The new economy setting of this case permits the instructor to extend well-known financial skills and concepts to an industry that attracts high student interest.

Industry:

Technology