Investors look for scalability based on the enterprise’s value proposition while making an investment decision.
Equity investors need enterprises to demonstrate their unique positioning and the value proposition offered in order to see high returns and scale from a potential investment. Since, investors usually take some ownership in the enterprise in exchange for the funds invested, they need to see rapid growth in the sector as well as the investee company.
The DREEM tool can be used to answer the following questions for an investor –
1. What is the risk associated with the sector? (given that it is a developing sector with high perceived risk
2. Has the enterprise demonstrated sustainable growth and scalability?
3. How effective is the management capacity of the enterprise?
The tool compares the DRE sector with other industry sectors across the economy to show the attractiveness of off-grid in comparison to others.
A detailed analysis of the enterprise performance encompasses an evaluation of the: (i) financial status of the enterprise including its liquidity, efficiency, profitability and productivity; (ii) business risks and management capability; and (iii) operational efficiency of the enterprise.
An analysis of these parameters by the tool will help an investor in assessing the invest-ibility of the enterprise along with the management capacity to scale the operations.
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