Environmental Technology Fund Partners and E-Leather

It is 2014 and Environmental Technologies Fund (ETF) Partners, a UK-based venture capital firm, has an opportunity to invest in a privately held UK company that manufactured engineered composition leather extracted from waste leather using an environmentally friendly process. The end product looked, smelled, and felt like natural leather. Scalable marketplace adoption of E-Leather’s products looked promising but was just that—promising. And the company’s success would largely depend on management’s ability to significantly improve the efficiency of its manufacturing operations. ETF needed to decide whether to invest in the company and, if so, at what valuation. In addition, ETF needed to decide the structure of the investment and how the firm would assess E-Leather’s environmental impact.