Capital budgeting and invesment analysis of a technology spinoff startup based in Canada

Abstract

There is a great demand on the technology market these days. However, there is also great competition. As a result, entrepreneurs and investors seek to optimize their resources when evaluating a new business. Based on these factors, the present work aims to describe the steps taken and the results of a capital budgeting and investment analysis, benchmarking of the current market leader and the analysis of digital marketing investment scenarios on a startup created as a technology spinoff based in the city of Waterloo - Ontario, Canada. A literature review and an action research were developed to conduct the study. During the phases of study, it was developed 3 growth scenarios for a better analysis based on a big market competitor well stablished in the market. In addition, it was built 3 scenarios of digital marketing investments that would impact on the modelling. A deep study on the costs associated to each platform of this industry, conversion rates and market penetration were considered. The complete analysis provided indexes such as the NPV, IRR, Payback and Breakeven periods. The study also made possible to calculate valuation of the business and necessity of working capital and funding. The outputs presented insightful guidance on how much should be invested on digital marketing platforms and on stablishing performance and growth goals as well as the understanding of how these metrics will impact on the market value of the Startup.