Will Entrants into a Liberalized Delivery Market Attract Investors

Robert H. Cohen, Matthew Robinson, Renee Sheehy, John Waller and Spyros Xenakis
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Robert H. Cohen: U.S. Postal Rate Commission
Matthew Robinson: U.S. Postal Rate Commission
Renee Sheehy: U.S. Postal Rate Commission
John Waller: U.S. Postal Rate Commission
Spyros Xenakis: U.S. Postal Rate Commission

Chapter Chapter 2 in Regulatory and Economic Challenges in the Postal and Delivery Sector, 2005, pp 31-51 from Springer

Abstract: 6. Conclusions Based on the results given above, we make the following conclusions concerning the potential for obtaining venture capital for an entrant delivery service. 1. It is unlikely that a realistic business plan will attract capital for an entrant delivery service in a liberalized postal market with characteristics like the U.S. market. Thus, liberalization is unlikely to trigger a graveyard spiral. 2. In order to achieve an IRR sufficient to attract venture capital, about two thirds of bulk mail would hive to be contestable. This is highly unlikely. 3. The most significant variables in a business plan are: a) the amount of contestable mail in the market served b) the rate at which the business grows to its maximum volume c) marketing and overhead expenses as a share of revenue d) the number of days of delivery per week. More scenarios can be examined with the models presented here. In addition, the models can be enchanced with new input variables for future research.

Keywords: Cash Flow; Venture Capital; Volume Growth; Delivery Operation; Bass Model (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/0-387-23637-6_2

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