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Inception Brewing Company
Stu Minshew
Chaitrali Amrutkar
Jose Valenzuela
Mark Wahl
Saurabh Chakradeo
Executive Summary
• Craft Beer Industry• Three co-founders
– CEO, COO, & Brewmaster
• Good synergy of complementary experiences, but lack experience in the craft beer industry
• Only have $20,000, need $800,000
Executive Summary
• Goals of our project– Analyze the management team fit– Analysis of business model and operations– Market Analysis of the craft beer industry– Financial Requirement Analysis– Valuation– Recommendations about raising capital
Management Team
CEO• Currently CFO • Start Up experience:
– Company 1– Company 2
• Pursuing a MBA from Georgia Institute of Technology (GA Tech)
Aaron Killingbeck - COO
• Currently Hospital Director• Served in the United States Navy as a
construction project manager– Simultaneously managed 13 construction
projects with a budget in excess of $4M• Strong skills in operations management
and adhering to government regulations
Brewmaster• Currently a Project/Applications Engineer • Served in the United States Navy as a
Laboratory Technician and Radiological Controls Supervisor aboard two Nuclear Submarines
• Strong Skills in chemical reactions, water quality, and manufacturing
Strengths & Weaknesses• Strengths
– Startup Experience– Operations and Manufacturing Skills– Unique Brewing Process
• Weaknesses– Lack of Beer Industry Experience– Large Management Team
Market Analysis
• Craft Beer– 2011: Growth in volume by 13% and dollars
by 15%– Currently only 5.9% of beer industry and an
$8.7 billion industry.
• Tennessee– 2011: No Regional Breweries (5 in South
East)– 2011: Only 5 Breweries producing over 500
barrels (17 in NC)– Lenient serving and distribution laws
Business Modeland Operations
Current status
• Beer recipes have been developed
• Looking for a tasting room to lease in Tennessee
4 ways of selling beer
• Pints• Growlers• Six packs• Kegs
Growlers and six packs can be purchased to be consumed at another location
High profit
Day to day operations
• Headed by Brewmaster– 30 barrels of beer a day using a forklift– Maintain quality and meet high demand
• 2-3 new employees in Jan 2014 to help with operating tasting room
Future hiring
• Depending on financing, hire help for: accounting, sales, marketing
• Expansion options Six packs, kegs : through distributors Distributors: restaurants, super markets, bars
Financial Requirements
Financial Requirements• Crucial for financing, and planning• Company stages
– Pre-Startup: till Dec. 2013– First Operating year: 2014
• Needs– Equipment purchases and startup costs– Brewing ingredients, gross wages, payroll
expenses, supplies, repairs and maintenance, advertising, travels, accounting, legal advice, rent, utilities, insurance
Financial Requirements
Financial Requirements
• Cash necessary Pre-Startup: $590,270• Breakeven in third quarter of 2014• With an initial $800,000 investment, the
company can sustain until the breakeven point
Valuation• Present value of the
free cash flows• Parameters
g 3%
Rf 2.81%
Beta 0.77
r 8.2%
TV 2016 $7,296,811.75
1 2 3
2014 2015 2016
Net Income (millions) 435608 619811 938258
Less: Taxes 130682.4 185943.3 281477.4
EBIAT 304925.6 433867.7 656780.6
Less: Capital Expenditure 350,000 0 0
Less: Change NWC 10% 30492.56 43386.77 65678.06
Free CashFlow -75567 390480.9 591102.5
Discount Factor 0.924214 0.854172 0.789438
PV Cash Flow -69840.1 333538 466639
Terminal Value 7296811.749 9243042
Net Present Value 9973378.882
• NPV $9,973,378.88• Only one iteration
Valuation
Simulation using Venture.SIM
• Growth Rate: Normal distribution with mean 2% and standard deviation 0.5%
• Beta: Uniform distribution with minimum 0.4 and maximum 1
• Number of iterations: 1000
• Average NPV: $9.65 million
Raising capital
• Need $800,000• Target 3-5 angel investors• Raise $250,000 - $300,000 from three• Give up 30% stake
– “Bill Lane case”– Dividends based on percentage of ownership
from year 2– Option to expand regionally and nationally
Conclusion
• <Market Analysis>