Since launching their business in 1999 “Innocent” has not only witnessed the rise of its own business, but also the rise of the smoothie market and the rise of competitors. Whilst being the market leader, the recent purchase of the number two smoothie brand, PJ Smoothies, by the multinational Pepsi Co firm means that “innocent” can expect fierce competition as it attempts to be the dominant smoothie brand in Europe. This case study tells the story of how “innocent” developed a business idea into a product and launched it into the UK market with very limited funds. At that time the smoothie market was in its infancy, although “innocent” was not the first into the market and could not benefit from any early entrant advantages. Nonetheless, the launch of the product coincided with the rapid growth of the market, especially in the form of own-label smoothies from Sainsbury, Tesco and M&S.

 

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Raising money When it comes to financing a business, there are two basic types of funding: debt and equity. Loans are debt financing; you borrow money and must pay it back, with interest, within a certain time frame. With equity funding, you raise money by selling a portion of your ownership in the company. This is the traditional route for people wishing to fund a start-up business, with friends and family probably the most common form of debt financiers; others are: banks, finance companies, credit unions, credit card companies and private corporations. Taking out a business loan allows the owners to remain in control of the company and not answer to investors. Getting a loan is also usually faster than searching out investors. Professional investors review thousands of investment opportunities each year, and invest in only a small fraction. Another benefit of debt financing is that as a firm repays its debts so it builds credit-worthiness. This makes the business more attractive to lenders in the future. SH Overall, debt financing is typically cheaper than equity financing because the firm pays only interest and fees, and retains full ownership of the company. Equity financing Selling equity means taking on investors and being accountable to them. Many small business owners raise equity by bringing in relatives, friends, colleagues or customers who hope to see their businesses succeed and get a retum on their investment. Other sources of equity financing include venture capitalists, which are professional investors willing to take risks on promising new businesses. These investors include individuals with substantial net worth, corporations and financial institutions (this is the group highlighted in the BBC television programme Dragons' Den). Most investors do not expect an immediate retum on their investment, but they would expect the business to be profitable in three to seven years. Equity investors can be passive or active. Passive investors are willing to offer capital but will play little or no part in running the company, whilst active investors expect to be heavily involved in the company's operations. Personality conflicts can arise in either arrangement. Equity financing is not cheap: investors are entitled to a share of the business's profits indefinitely. Conversely, small business owners who may have difficulty securing a traditional loan or are comfortable sharing control of their business with partners may find equity financing a mutually beneficial arrangement. pre mutua Venture capital is a widely used phrase that few people properly understand. Typically, it refers to investment funds or partnerships (and, increasingly, venture capital divisions within large corporations) that focus on investing in new, promising start-up and emerging companies. Venture capitalists (VCS) have invested in some of today's most famous corporate names, including Apple, Genentech, Intel and Google. Typically, the investment is in company stock - the venture capitalist gets an ownership interest for the money invested. Beyond supplying the company with money, the VC also provides assistance and expertise with business planning - bringing industry knowledge, experience in growing businesses and expertise in taking the company public one day. Entrepreneurs should be wary; venture capitalists' primary motive is to make a lot of money on their intended investment. Furthermore, most venture capitalists are interested only in businesses that can grow very big. So, if you are a small grocery store, you should seek funds elsewhere. 900 Sha Fortunately, the founders of innocent benefited from very good educations and had many business contacts from over four years working in advertising and management consultancy, hence, it was not long before they were in touch with venture capitalists. Eventually, Maurice Pinto, a wealthy US businessman, invested £250,000 and became the fourth shareholder in the group, retaining a 20 per cent stake. The money provided salaries for the three entrepreneurs, office space, cash to buy production capacity at bottling plants, promotional material and labelling for the bottles. Raising money When it comes to financing a business, there are two basic types of funding: debt and equity. Loans are debt financing; you borrow money and must pay it back, with interest, within a certain time frame. With equity funding, you raise money by selling a portion of your ownership in the company. This is the traditional route for people wishing to fund a start-up business, with friends and family probably the most common form of debt financiers; others are: banks, finance companies, credit unions, credit card companies and private corporations. Taking out a business loan allows the owners to remain in control of the company and not answer to investors. Getting a loan is also usually faster than searching out investors. Professional investors review thousands of investment opportunities each year, and invest in only a small fraction. Another benefit of debt financing is that as a firm repays its debts so it builds credit-worthiness. This makes the business more attractive to lenders in the future. SH Overall, debt financing is typically cheaper than equity financing because the firm pays only interest and fees, and retains full ownership of the company. Equity financing Selling equity means taking on investors and being accountable to them. Many small business owners raise equity by bringing in relatives, friends, colleagues or customers who hope to see their businesses succeed and get a retum on their investment. Other sources of equity financing include venture capitalists, which are professional investors willing to take risks on promising new businesses. These investors include individuals with substantial net worth, corporations and financial institutions (this is the group highlighted in the BBC television programme Dragons' Den). Most investors do not expect an immediate retum on their investment, but they would expect the business to be profitable in three to seven years. Equity investors can be passive or active. Passive investors are willing to offer capital but will play little or no part in running the company, whilst active investors expect to be heavily involved in the company's operations. Personality conflicts can arise in either arrangement. Equity financing is not cheap: investors are entitled to a share of the business's profits indefinitely. Conversely, small business owners who may have difficulty securing a traditional loan or are comfortable sharing control of their business with partners may find equity financing a mutually beneficial arrangement. pre mutua Venture capital is a widely used phrase that few people properly understand. Typically, it refers to investment funds or partnerships (and, increasingly, venture capital divisions within large corporations) that focus on investing in new, promising start-up and emerging companies. Venture capitalists (VCS) have invested in some of today's most famous corporate names, including Apple, Genentech, Intel and Google. Typically, the investment is in company stock - the venture capitalist gets an ownership interest for the money invested. Beyond supplying the company with money, the VC also provides assistance and expertise with business planning - bringing industry knowledge, experience in growing businesses and expertise in taking the company public one day. Entrepreneurs should be wary; venture capitalists' primary motive is to make a lot of money on their intended investment. Furthermore, most venture capitalists are interested only in businesses that can grow very big. So, if you are a small grocery store, you should seek funds elsewhere. 900 Sha Fortunately, the founders of innocent benefited from very good educations and had many business contacts from over four years working in advertising and management consultancy, hence, it was not long before they were in touch with venture capitalists. Eventually, Maurice Pinto, a wealthy US businessman, invested £250,000 and became the fourth shareholder in the group, retaining a 20 per cent stake. The money provided salaries for the three entrepreneurs, office space, cash to buy production capacity at bottling plants, promotional material and labelling for the bottles.

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Innocent secured equity financing Equity financing involves raising funds by selling a portion of ownership in the company to investors In this case M... View the full answer