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This case study highlights a major challenge of securing funding for further expansion of business, which is usually faced by start-ups. Start-ups hit roadblocks for want of additional funding for expansion after their initial success. How can start-ups secure additional funding for expansion and continue their successful growth? This case study focuses on the challenges faced by Pankaj Judge in procuring additional funding for his start-up Chai Thela. Pankaj pursued various options such as securing additional funding from Angel investors, approaching venture capitalist firms, considering corporate venture capital, and approaching banks for a loan, to scale-up his operations. The aforementioned options are commonly pursued by several other start-ups mushrooming in India. This case promotes discussion on the advantages and disadvantages of each of these options. Moreover, the case highlights the aspect of equity dilution when start-ups opt for additional funding. The case concludes by discussing strategic actions required to ensure Chai Thela's uninterrupted growth.
Key Words: Angel investors, Bank loans, (Corporate) Venture Capital, Entrepreneurship, Equity dilution, Funding, Start-ups, Scaling up
INTRODUCTION
Thank God for tea! What would the world do without tea? How did it exist?
I am glad I was not born before tea.
- Sydney Smith (Smith, Holland and Austin, 1855, p. 337)
It was a cold December morning in 2018.... Pankaj Judge was looking at the papers lying in front of him; he was in his study room at his residence in New Delhi, India. For him, failure to take an instant decision would indeed create problems in the expansion of his Chai Thela business. Moreover, he would lose his existing business or end-up being swallowed up by another big player if he fails to take any step to expand his business. Spread across on his table were the options of infusing funds for expanding his Chai Thela tea joints from the existing 20 outlets to 100 possible outlets in the next couple of years. He considered options such as bootstrapping, Angel investors, Franchise model, Venture Capitalist (VC) funding, Corporate Venture Capital (CVC), and bank loans. Each had its own merits and challenges. After weighing the advantages and disadvantages of every option available to him, he had to take an instant decision and start moving forward before it is too late.