Usertip: Early-stage financing considerations

• Main Authors: GOH, Kenneth, ANG, Jolyn, CHAN, CW
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2024
• Subjects: Digital platforms; Software as a Service; Venture life cycle; Valuation; Finance and Financial Management; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/472; https://cmp.smu.edu.sg/case/5996
• Institution: Singapore Management University

Rodney Yap, co-founder and CEO of Usertip, a digital adoption platform tech start-up, had completed a pre-seed funding round for the company. Yap and his co-founders had leveraged Singapore’s tech hub status and government support for digital innovation to develop software that would help train users on new technologies, thereby improving a firm’s productivity. Along with private individuals, venture capital firm Protégé Ventures was one of Usertip’s early investors. Protégé Ventures was founded by the Singapore Management University’s Institute of Innovation & Entrepreneurship and Kairos ASEAN to allow students at tertiary institutions in Singapore to try their hand at venture investing. With Usertip asking for a S$3 million (US$2.22 million) post-money valuation, Protégé Ventures invested S$30,000 (US$22,000) using a Convertible Agreement Regarding Equity (CARE). While the individual investors chose to take a direct equity stake, Protégé Ventures’ CARE included a 20% discount rate but without a valuation cap. Did Yap get a good deal? This case may be used for graduate, postgraduate and executive education classes. Learning objectives for the students are to identify good investment opportunities, understand how venture capital funds work and analyse an early-stage investment deal.