E Ink as a Revolutionary Company - Case Study Example

The company was receiving lots of feedback from potential investors and customers who had different views of the best use for electronic ink. The company had to decide the best opportunities for the company based on the company’s vision.

The company wanted to create radio paper, but the technology was not ready for that application. The firm had multiple opportunities to generate money using the technology for other applications. Another dilemma the company had was the fact that it needed more money to continue its venture. The firm needed an additional $20 million for its second round of financing. There was plenty of interest from venture capitalists interested in investing in the company. The firm had to decide how to obtain the money and which investors to choose. The strategy the firm ends up choosing would affect the capital structure of the enterprise. Selling off too much equity could relinquish control of the company. On the other hand, using debt instruments could place the company at risk since the firm was not generating any revenues yet.

2.
The three-stage approach that E Ink has planned is a very sound business strategy. The company has to take advantage of the firm’s capabilities to generate revenues. The firm cannot afford to wait 4 to 5 years for the radio paper to be ready. The first stage of the plan is to use electronic ink to make large-area displays. The marketplace for this product is huge because thousands of businesses can benefit from the application of electronic ink for their advertising displays.

The company could afford to launch this product after it receives its second round of financing. The firm needs between $10 million and 20 million dollars to launch the product. The company already has a contract with JC Penney to develop its first large area displays. The product offers many advantages to customers such as lower costs and the ability to change advertising messages without having to incur in the cost of manually changing the sign.

The second stage of E Ink’s plan is to utilize the technology for flat panel displays. By 2004 the flat panel market was supposed to reach $25.9 billion. The relevant market in which E Ink could apply its invention was between $4.9 billion to $6.9 billion. The use of electronic ink enables companies that use flat panel displays to add value to their products which would allow the firms to sell their products at a premium price. The application of electronic ink would provide greater visual appeal and lower power consumption.

The company needs between $30 million to $50 million to finance this phase. The third phase of the project is radio paper. Radio paper would enable the company to create newspapers and books using electronic ink technology. The use of technology would revolutionize the publishing industry. The use of the technology could be extremely advantageous for publishers because it could create a paper-free distribution model. The company could be ready to create electronic books in two to three years and newspapers in four to five years. The amount of money needed to finance phase three is between $50 million to $100 million.

3.
The company needs to raise money to finance phase I of the project. The firm is currently spending over $500,000 a month and it soon will increase its expenses to nearly $1 million a month. The company estimates that it needs $10 to $20 million to accomplish phase I. My recommendation is for the company to obtain a higher estimate of $20 million. The company already has several venture capital investors on board. Due to the excitement from potential customers and the excellent feedback the company has received,d I believe that the best alternative is for the company to start the process of going public through an initial public offering (IPO). The company already has its first contract with JC Penney. The firm can start making money selling large area displays. In the future,e once phase I is completed and the company starts to generate money the firm could finance a portion of its phase II and phase III requirements using corporate bonds. Read More