Growing up in China: The Financing of BabyCare Limited

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Case

Reference no. 9-204-029

Subject category: Finance, Accounting and Control

Authors: Mihir A Desai (Harvard Business School); Mark F Veblen (Harvard Business School)

Published by: Harvard Business Publishing

Originally published in: 2003

Version: 22 September 2003

Length: 16 pages

Data source: Field research

Topics: Financial strategy; Financing; Business models; Business plans; International business; International entrepreneurial finance; Emerging markets; Valuation; Entrepreneurial finance; Venture capital; Decision making; Negotiation

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Abstract

The CFO of this infant nutritional products company must choose among competing financing offers. The interplay of Chinese legal and customs restrictions and venture capitalists' bargaining techniques challenge the CFO to navigate a tricky negotiation and to devise a unique business model given these constraints. The case provides a valuation exercise and highlights some of the difficult questions a discerning venture capitalist might ask, requiring the CFO to justify his overall business model and working capital needs. To obtain executable spreadsheets (courseware), please contact our customer service department at custserv@hbsp.harvard.edu.

Location:

China

Size:

USD5.7 million revenues, 80 employees

Other setting(s):

2002