Abstract

In 2012, Strategic Global Capital (“SGC”) was founded by Bryan Kuhn, his wife Cathy and his mother Dorothy as a secondary debt market for micro finance notes. Using the founders’ money, SGC launched a pilot program in Ecuador that proved their concept worked. Leveraging on their success, Bryan and his family wanted to further expand the business. In order to grow SGC with the most optimal capital structure Bryan and his family would need to consider all the existing financial conditions and potential risks. What would be the best overall capital structure in terms of the proportion and type(s) of debt and equity that should be utilized by the company? How (or should) the company raise equity based capital? How (or should) the company raise debt based capital?

Learning Objectives

The learning objectives of the case are to:
- Evaluate a company’s optimal capital structure with valuation theories;
- Understand the difference of optimal capital structure in practice;
- Examine funding of the company for future expansion; and
- Have a basic understanding on the concept of micro financing.