4 David Silvester is the founder and owner of a recently formed gift packaging company, Gift Designs Ltd. David has
spotted an opportunity for a new type of gift packaging. This uses a new process to make waterproof cardboard and
then shapes and cuts the card in such a way to produce a container or vase for holding cut flowers. The containers
can be stored flat and in bulk and then simply squeezed to create the flowerpot into which flowers and water are then
put. The potential market for the product is huge. In the UK hospitals alone there are 200,000 bunches of flowers
bought each year for patients. David’s innovative product does away with the need for hospitals to provide and store
glass vases. The paper vases are simple, safe and hygienic. He has also identified two other potential markets; firstly,
the market for fresh flowers supplied by florists and secondly, the corporate gift market where clients such as car
dealers present a new owner with an expensive bunch of flowers when the customer takes delivery of a new car. The
vase can be printed using a customer’s design and logo and creates an opportunity for real differentiation and impact
at sales conferences and other high profile PR events.
David anticipates a rapid growth in Gift Designs as its products become known and appreciated. The key question is
how quickly the company should grow and the types of funding needed to support its growth and development. The
initial financial demands of the business have been quite modest but David has estimated that the business needs
￡500K to support its development over the next two years and is uncertain as to the types of funding best suited to
a new business as it looks to grow rapidly. He understands that business risk and financial risk is not the same thing
and is looking for advice on how he should organise the funding of the business. He is also aware of the need to avoid
reliance on friends and family for funding and to broaden the financial support for the business. Clearly the funding
required would also be affected by the activities David decides to carry out himself and those activities better provided
by external suppliers.
Required:
(a) Provide David with a short report on the key issues he should take into account when developing a strategy
for funding Gift Designs’ growth and development. (10 marks)