The management team of SAVEory Snacks is investing $100,000 of personal equity to begin our company. This will be used to begin SAVEory Snacks and to develop or recipe and marketing campaigns. Beyond this, SAVEory Snacks is seeking equity financing from Venture Capitalists to begin our business in San Diego. The management team will hold 60% of the equity, with 6%
equity being paid to the Board of Advisors, 2% each to our COO and Food Engineer, and 30% to Venture Capitalists. The majority of our financing will be derived from our cash flows throughout the year, which is positive beginning in January. The venture funding is to enable us to begin our business (pay for chip inputs, rent, patents, office supplies, marketing
30 campaign). We have given ourselves an $80,000 buffer funding in order to cover unforeseen costs, expansion, and future recipe and food development. We will begin expanding to other school districts in the San Diego County in fiscal year 2 (the beginning of our second full school year). We will break even in the 2nd Quarter of fiscal Year 3 (school year 2). Our substantial expansion throughout the country is beginning in fiscal year 3. We do not project that we will need additional funding for this expansion.
Proposed Offering
We are seeking $250,000 from Venture Capitalists based off of the results we found from our NPV calculation. Our present value valuation of SAVEory Snacks is $1,246,043. The Venture Capitalists investing the money will then hold 30% equity in SAVEory Snacks. As noted above, this cash infusion will enable us to meet the following milestones:
1. Develop our unique chip recipe
After the Venture Capital investment of $250,000, they will hold 30% equity in the firm. This investment will guarantee them a seat on the board. In addition, the management team will hold 60% equity stake, while the board will be given a 6% equity stake in exchange for their guidance, with 4% paid to our COO and Food Engineer.
Use of Funds
The money we receive from Venture Capitalists will be used to help us pay for our startup expenses during the first six months. The total fixed costs during the first six months will be approximately $ 159,851. Therefore, $ 159,851 of the venture capitalists funds will be used on fixed costs: salary - $68,000; rent - $3204; marketing - $16,000; legal - $8,332; and others adding up to $7,464. The remaining funds will be used as cash cushion in case any unexpected obstacles arise.
Investor’s Return
At the end of year 5, the management team will meet venture capital growth demands, and buyback the equity stake of the venture capitalists. Their investment of $250,000 for 30% will bought-out $1,250,000, a 1000% return. We plan to be acquired by one of the major players in the snack food industry at the end of year 5. These companies include, but are not limited to the following: PepsiCo (Frito-Lay), Kraft, General Mills, and Diamond Foods. These companies have a significant history of acquiring start-up snack companies, and we view this as a viable exit strategy, and a strategy that will reward our investors.
SAVEory Snacks--Chipping Away at Junk Food
A: Board ………
B: Marketing Research ……….……….
C: Financial Statements ………
D: Management Credentials ………..
E: Works Cited ………
Advisory Board Members:
Management and Fundraising Advisor:
Andy Silverman: Mr. Silverman has worked in Private Equity finance for over 10 years, most recently at Capital Resource Partners in Boston, MA. His roles include managing the funds investments, and working with these portfolio companies, as well as evaluating new investment opportunities. Andy Silverman will serve on our board to help SAVEory Snacks successfully run and manage our company. He will also advise SAVEory Snacks in pitching to Venture Capitalists, and acquiring the necessary funding.
Financial Advisor: Benjamin Krall will serve as an advisor on our board to assist in the finances of the company. Mr. Krall has a financial background, and he is looking to become a venture capitalist in the near future.
Wholesaling Advisor:
We are currently seeking a board member with an expertise in wholesaling and distribution. This board member’s knowledge and connections will help our company grow nationally.
Operations Advisor:
We are seeking a board member who can coordinate our supply chain and work with our wholesalers.
Legal Advisor:
We are seeking a board member who will provide legal counsel. This board member will assist in obtaining patents, establishing our LLC and any legal issue that may arise.
Product Development Advisor (Nutritionist):
Katelyn Cowen, a Health and Wellness Promotions Specialist at Syracuse University, will be advising in regards to our healthy chips’ contents and making sure that our company adheres to the school’s nutritional dietary program.
Focus Group Results:
Conducted with 6 Students from Schuylkill Valley High School: Pat Cieniewicz; Jonny Snyder; Dom DeFuso; Morgan Greenwood; Chris Lorah;
Jenna Potts.
Questions:
What do you usually do for lunch? Three mostly pack while three mostly buy
If you buy:
What are your favorite items? Cheesesteak, Chicken Patty
Who Pays? One student’s parents pay; one pays herself; the other is a mixed result What is the satisfaction with cafeteria food? Generally dissatisfied
Do parents affect your purchasing decisions at school? No.
If you pack:
What main items do you pack? Sandwiches/ leftovers
What snacks do you pack on the side? Brownies; chips; fruit; jello/yogurt/ pudding; bars; cookies What drinks do you pack? Water and sometimes iced tea
Do your parents pack your lunches? One packs his own lunch while another’s parents pack his lunch. One’s mom makes her sandwich, but she packs her whole lunch.
How big of a factor does health play in your purchasing/ packing decisions? Packing allows one to eat healthier food. Students try to eat healthier during days of sports or games. It does not seem to have a big effect on buyers. Drinking water is healthy to four out of six.
Have you noticed anything that has changed over the past few years in terms of menu? In terms of entrees, there haven’t been many changes.
Have you noticed any changes in terms of snack variety? They haven’t noticed anything significant other than certain drink changes.
Do you ever buy snacks after you have finished your lunch? One buys ice cream sandwiches after lunch. Others buy cookies or French Onion Sun Chips.
How often do you buy snacks? One buys every day; two students buy 3/5 week days. One buys 1/5 week days. One buys once a month.
Where do you buy them from (cafeteria/ vending machines)? Vending Machines are locked until the end of school, so the students only buy snacks from the lunchroom during school.
How often do you buy chips? Chips are mostly packed. One buys chips once a week.
Do you mind that the chips have gotten more health conscious? Healthiness of chips absolutely affects purchase decisions negatively. One student doesn’t like Sun Chips.
What types of chips do you like? French Onion Sun Chips; Doritos that are not baked; Cheese Curls; Dieffenbach’s Chips; don’t really like health chips.
Would you try chips made from something other than potatoes? One didn’t like sweet potato chips, but would try them with a flavoring. Two like apple chips. One likes plantains. Two others don’t like plantains
Would you try our product? 5/6 would try the new product
Word Association:
School – bus; lunch; bus; math; books; work Lunch – lady; friends; food; cafeteria; gross; dinner
Cafeteria – Schuylkill Valley; lunch; food; chairs; table; lunch Health – apple; water; vegetable; class; water; vegetables Chips – salt; potato; potato; potato; potato; sour cream & onion
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