FIN108H Entrepreneurial Finance Assignment Brief 2025/26

I. ASSIGNMENT OBJECTIVE

This assignment simulates the process entrepreneurs and investors go through when designing, evaluating, and funding a startup. 

Students will:

• Propose a startup idea and evaluate it using suitable framework.
• Work with financial data to formulate financial projections and valuation models.
• Justify appropriate valuation methods for different startup stages.
• Propose suitable financing options.
• Pitch the venture.

1.  Idea 

II. ASSIGNMENT TASK

Each group develops a startup idea, including the following key information:

• Company name
• Industry or sector of operation
• Business model (how the company generates revenue, e.g., online channels,B2B, B2C, etc.)
• Main products/services offered by the company
• Pricing strategy (expected price levels, target customer segment)

Note: Your startup idea must be realistic and researchable. Choose an industry where you can find sufÏcient market and industry data to support later analysis (Step 3).

2. Financial Statement and Phase Assessment

• You will receive a set of historical financial statements (3 years) for your hypothetical startup. 
• Assess and justify the current phase of the venture. Explain the reasoning behind your phase classification  (e.g.,   revenue scale,   profitability,   industry   benchmarks, growthtrajectory).Note: Interpreting the Same Numbers Differently
• The statements are the same for all groups, to ensure comparability. However, the interpretation of these numbers depends on the industry you choose. 
• You must analyze how the financial data should be understood in your chosen sector(e.g., $1M revenue may be early-stage for a machinery startup but already scale-upfor a beverage brand).Based on this, justify the current phase of the venture.
• This   phase   classification   will   influence   your   assumptions   in   Step   4   (profor maprojections) and Step 5 (valuation).

3. Macroeconomic and Industry Analysis 

Perform macroeconomic analysis:

• Assess   the   economic   environment   (GDP   growth,   inflation,   interest   rates,exchange rates, consumer spending, investment climate).
• Highlight factors that directly impact your startup’s industry (e.g., high in flationraising input costs, interest rates affecting VC funding appetite, currency riskfor exporters).
• Consider   policy,   regulation,   and   government   initiatives   that   may   create opportunities or threats.

Perform industry analysis:

• Evaluate industry size, growth trends, and key drivers.
• Map the competitive landscape and company position: key players, barriers to entry, substitutes, customer behaviour.

Note: The Foundation for Your Assumptions

• Do not overlook the importance of this step. Macro conditions and industry context provides the foundation for realistic financial projections and valuation.
• Use credible data sources (industry reports, databases, news articles, company filings).Generic unsupported claims (e.g., “the market is huge and growing fast”) will not be accepted.
• Strong analysis is not just “describing the industry”. You need to explicitly connect your analysis in this step to the assumptions in Step 4.
  oLink   macro   conditions   =>   industry   dynamics   =>   startup   implications   (e.g.,Rising interest rates may slow VC funding, forcing startups to conserve cash.)
  oShow clearly how your macro/industry analysis informs your projection and valuation.

4. Pro Forma Projections 

• Build the 5-year projected income statement, balance sheet, and cash flow.
• All projections must be linked to explicit assumptions.Note: Capex & Reinvestment Assumptions
• Use the provided financial statements as a starting point. Assume the startup requires ongoing reinvestment  to sustain growth (assume specific CAPEX/Revenue Ratio for each year)
• Clearly explain and justify the ratio you apply.
• Note: Startups rarely generate strong positive free cash flow early. If your projections show large surpluses, you must provide a strong explanation why your chosen industry and phase would require little reinvestment.

5. Valuation 

• Apply   at   least   02   valuation   methods:   VC   Method,   DCF   Model,   Multiples  /Comparables.
• Justify why the chosen method fits your startup’s stage and industry.
• Compare results from multiple methods and discuss differences.

Note:

• Your valuation must be internally consistent with prior steps (industry analysis, growth assumptions, margins, phase classification).
• Don’t just compute the numbers, you need to interpret it. If results diverge (e.g., VCMethod gives $15M, DCF gives $25M), explain why.
• Discuss the limitations of each method in your case.
• Acknowledge that in real life, investors rarely take models at face value. They use valuation as a negotiation anchor. Show awareness of this gap.

6. Funding Strategy

• Propose an appropriate funding sources and justify your choice.
• Discuss the potential impacts of the chosen funding sources on your company.

7. Pitch Session

• Prepare a 10-minute pitch presentation as if presenting to investors.

8. Bonus question

In the final report, respond to this scenario:“Suppose this company had no revenues yet (pre-revenue stage). How would you value itinstead? Which methods would you use, what assumptions would be required, and why?”

III. ADDITIONAL INFORMATION AND ASSUMPTION

1. VC’s failure rate at different stages

2. Milestone assumption

Assume that your startup needs to make a large investment to grow and expand its businessin 2027, with a CAPEX/Revenue ratio = 65%.

IV. DELIVERABLES

• 01 Word file – Written Report (max 15 pages, excluding appendices)
• 01 Excel file – Show all calculations
• 01 PowerPoint file Note:
• All work should be word processed in 12-point font Calibri or Times New Roman.
• Include all reference in your reference list (APA 7th style).

V. ASSESSMENT RUBRIC

VI. SUBMISSION Before submitÝng

your work, please ensure that:

• You have proof read you work thoroughly to ensure your work is presented appropriately
• You have addressed all the required elements of the assessment
• You have referenced in accordance with the guidance provided
• The submission is in the correct formatFollow this URL to submit your assignment: