Nantero Case Analysis
1. What aspects of nanotechnology make it attractive for VC investment?-The potential benefit of utilizing nanotechnology to hard-goods is huge, since the technology is a set of enabling tools and processes for manipulating matter that virtually all hard-goods companies can exploit in some fashion.-Especially in semiconductor industry, because the Mooreâs Law is facing boundary by using transistors, finding an alternative would be a significant breakthrough and could replace everything from existing products such as flash memory. – The semiconductor market is huge and kept growing. The global sales in 2004 is more than 200 billion â great value that nanotechnology could capture.  2. Suppose Nantero elects to pursue the fabless model and to accept Zeusâs terms. What is the true pre-money valuation of Nantero implied by Zeusâs proposed terms? -By using Black Scholes, the pre-money value of Nantero turns out to be $40.5million-This calculation came from an idea that while we donât know the pre-money value of Nantero, we can get that by using the option pricing model from Black Scholes.
-Since the aggregate preferred stock is $46million, the VC would obtain the face amount of preferred stock in case of liquidation when the firm value becomes more than $46million. = SlopeA-Also, by assuming the common stock is 46million, the preferred stock would be converted to common stock when the firm value becomes more than $92million. = Slope B-The slope A and B can be shown by the calculation below.Series C $30million = (Firm value â Call option ( S = Firm value, K = 46million, T = 5, Rf = 3.92% (continuously compounded), Volatility = 33%) Â ) âSlope A