Dermacare Case Analysis
DermaCare has carefully considered its investment opportunities and has decided to partner with the Band of Angels. This will be a Series A funding round of $1.5 million assuming a $4.5 million post financing valuation.
Objective – Consider and decide on which investment offer will be most advantageous for DermaCare and its owners.
Methods – Using the FIT Framework, this is how I broke down the opportunities for DermaCare
1) Using DRTV to market direct to the consumer instead of the approach Zeno Zit Zapper is taking going through Dermatologists and other retail plays
a. With 45 million people in the US alone suffering from acne in a $2 billion a year OTC market, this is a slam dunk product
2) We have a great resource on our team in Wally Bunch by going the Band of Angels route
a. Wally has both an investment and medical background so he should have a good idea of how to bring this product to market
b. Everyone has pimples!!
3) While we would also have Charles Moldow if we went the VC route, going into business with friends is never a good decision. Also he is new to the VC world so wouldn’t be as much help
Assumptions – How I came to my conclusion to go with Band of Angels
1) Band of Angels
a. They will be more invested intellectually and financially (upfront)
i. Considering the VC group will not give more than $1 million up front prior to FDA approval – which we just missed our filing date – the $1.5 million upfront from Band of Angels will go further
b. Wally