Case 2:
MuMaté
Maastricht University
School of Business and Economics
Maastricht, 06.12.2021
Entrepreneurial Finance, EBC4181,
Damiani, Matteo
Case 2: MuMaté
Academic Year 2021/22
,Table of Contents
1. Introduction ............................................................................................................................ 3
2. MuMaté – the need for new capital ....................................................................................... 3
2.1 How much capital should be invested into MuMaté? ...................................................... 3
2.2 Post money valuation ....................................................................................................... 6
2.3 Appropriate size of the option pool ................................................................................. 8
2.4 Board composition ......................................................................................................... 10
2.5 Other negotiation terms.................................................................................................. 11
3. Conclusion ........................................................................................................................... 12
References ................................................................................................................................ 13
Exhibit ...................................................................................................................................... 14
2
, 1. Introduction
MuMaté is a Seattle-based beverage company that produces vegan tea aimed at a young
audience who want to improve their lifestyle. Starting as a collaboration between Sarah
Maxwell and Angela Taylor, the drink quickly gained a loyal audience, and the company was
ready for the next step. In April 2012, the founders were looking to raise USD2.5m funds in
order to expand into the local market. The firm is looking at several options to accrue the
required capital and has decided that approaching a venture capitalist might be the most
sensible way to gather the funds. DuPage ventures is one of the venture capitalists that showed
interest in MuMaté, and not long after negotiations about an external financing round were set
up between the two parties. However, the two parties still had to discuss how the term sheet
would look before a financing round could take place (Eisenmann and Godden, 2013).
The first point of discussion will address how much DuPage should invest in MuMaté and what
valuation method would be suitable to value the start-up appropriately. This step will be
followed by the pre and post-money valuation of MuMaté to see what the company is worth
after the investment and what size of the value would be assigned to DuPage. Besides the
valuation of MuMaté other terms have to be agreed upon. One of these terms is the size of the
option pool, which will be given to potential investors and employees. Another crucial
discussion point is the board's composition, aspects like board size, number of independent
directors, and board members have to be clarified. A final discussion point will be about
remaining terms like the potential CEO replacement and vesting the founder shares. Once all
these discussion points have been worked out, a reasonable term sheet can be accepted by
MuMaté. However, if both parties cannot conclude, other investment options must be
considered.
2. MuMaté – the need for new capital
2.1 How much capital should be invested into MuMaté?
Several aspects have to be considered to decide how much DuPage should invest into MuMaté.
Own financial projections implied a need for USD2.5m additional investment into the company
to reach cash flow break-even in 2015. However, it is essential to consider whether to raise the
needed capital in one or more rounds.
3
MuMaté
Maastricht University
School of Business and Economics
Maastricht, 06.12.2021
Entrepreneurial Finance, EBC4181,
Damiani, Matteo
Case 2: MuMaté
Academic Year 2021/22
,Table of Contents
1. Introduction ............................................................................................................................ 3
2. MuMaté – the need for new capital ....................................................................................... 3
2.1 How much capital should be invested into MuMaté? ...................................................... 3
2.2 Post money valuation ....................................................................................................... 6
2.3 Appropriate size of the option pool ................................................................................. 8
2.4 Board composition ......................................................................................................... 10
2.5 Other negotiation terms.................................................................................................. 11
3. Conclusion ........................................................................................................................... 12
References ................................................................................................................................ 13
Exhibit ...................................................................................................................................... 14
2
, 1. Introduction
MuMaté is a Seattle-based beverage company that produces vegan tea aimed at a young
audience who want to improve their lifestyle. Starting as a collaboration between Sarah
Maxwell and Angela Taylor, the drink quickly gained a loyal audience, and the company was
ready for the next step. In April 2012, the founders were looking to raise USD2.5m funds in
order to expand into the local market. The firm is looking at several options to accrue the
required capital and has decided that approaching a venture capitalist might be the most
sensible way to gather the funds. DuPage ventures is one of the venture capitalists that showed
interest in MuMaté, and not long after negotiations about an external financing round were set
up between the two parties. However, the two parties still had to discuss how the term sheet
would look before a financing round could take place (Eisenmann and Godden, 2013).
The first point of discussion will address how much DuPage should invest in MuMaté and what
valuation method would be suitable to value the start-up appropriately. This step will be
followed by the pre and post-money valuation of MuMaté to see what the company is worth
after the investment and what size of the value would be assigned to DuPage. Besides the
valuation of MuMaté other terms have to be agreed upon. One of these terms is the size of the
option pool, which will be given to potential investors and employees. Another crucial
discussion point is the board's composition, aspects like board size, number of independent
directors, and board members have to be clarified. A final discussion point will be about
remaining terms like the potential CEO replacement and vesting the founder shares. Once all
these discussion points have been worked out, a reasonable term sheet can be accepted by
MuMaté. However, if both parties cannot conclude, other investment options must be
considered.
2. MuMaté – the need for new capital
2.1 How much capital should be invested into MuMaté?
Several aspects have to be considered to decide how much DuPage should invest into MuMaté.
Own financial projections implied a need for USD2.5m additional investment into the company
to reach cash flow break-even in 2015. However, it is essential to consider whether to raise the
needed capital in one or more rounds.
3
