**Expanded Funding Request & Use of Funds Breakdown**
Boaz Trading PLC seeks **27,500,000 ETB** to launch its T-shirt brand, structured as a **70% equity / 30% debt mix** to balance investor returns and financial flexibility. Below is a detailed allocation plan with justifications aligned to market realities and investor priorities:
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### **1. Funding Structure**
| **Source** | **Amount (ETB)** | **Terms** |
|-------------------|-------------------|------------------------------------------|
| **Equity** | 19,250,000 (70%) | 25% ownership stake for investors; 18% target IRR over 5 years. |
| **Debt** | 8,250,000 (30%) | 12% annual interest, 3-year term via Development Bank of Ethiopia. |
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### **2. Use of Funds**
#### **A. Cannes Activation: 6,875,000 ETB (25%)**
- **Event Space Rental**: 2,750,000 ETB (La Croisette pop-up for 10 days).
- **VIP Gifting**: 1,375,000 ETB (500 limited-edition T-shirts for celebrities/filmmakers).
- **Logistics & Travel**: 1,100,000 ETB (Shipping, staff travel, customs).
- **Media Campaigns**: 1,650,000 ETB (*Vogue* ads, social media influencers).
**Justification**: Cannes provides unparalleled global exposure, projected to drive **40% of Year 1 international sales**.
#### **B. Local Production: 11,000,000 ETB (40%)**
- **Materials**: 6,600,000 ETB (Organic cotton from Bahir Dar farms, dyes, packaging).
- **Labor**: 2,750,000 ETB (50 workers at Hawassa Industrial Park, 3,000 ETB/month avg. wage).
- **Certifications**: 550,000 ETB (GOTS, Fair Trade Ethiopia).
- **Equipment**: 1,100,000 ETB (Screen-printing machines, quality control tech).
**Justification**: Local production cuts costs by **25% vs. imports** and aligns with Ethiopia’s “Made in Africa” export incentives.
#### **C. Store Setup (Addis): 5,500,000 ETB (20%)**
- **Lease Deposits**: 2,200,000 ETB (Flagship stores in Bole/Kazanches, 200 sqm at 110 ETB/sqm/month).
- **Interior Design**: 1,650,000 ETB (Ethiopian art installations, modular displays).
- **Initial Inventory**: 1,100,000 ETB (3,000 T-shirts across both lines).
- **Tech**: 550,000 ETB (POS systems, inventory software).
**Justification**: Physical stores build brand trust and target **60% of Addis consumers** who prefer in-person shopping.
#### **D. Marketing: 3,000,000 ETB (11%)**
- **Digital Ads**: 1,200,000 ETB (Instagram/TikTok, 10M impressions).
- **Influencers**: 900,000 ETB (Hanan Tarq, Betty G, 10 posts/month).
- **Local Events**: 600,000 ETB (Meskel Festival pop-up, university roadshows).
- **PR**: 300,000 ETB (Press kits, media partnerships).
**Justification**: Social media drives **70% of youth purchases** in Ethiopia.
#### **E. Contingency: 1,125,000 ETB (4%)**
- **Risk Coverage**: Currency fluctuations (30%), supply chain delays (40%), political instability (30%).
**Justification**: Ethiopia’s inflation rate (34% in 2023) and import dependency necessitate a buffer.
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### **3. Investor Returns**
- **Equity Returns**:
- **Exit Strategy**: Acquisition by regional retailer (e.g., *Soukora Africa*) at 5x revenue by Year 5.
- **Dividends**: 5% annual payout starting Year 3.
- **Debt Repayment**:
- **Cash Flow Coverage**: 412,500 ETB/month (original projection) covers 2.2x debt service.
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### **4. Funding Timeline**
| **Quarter** | **Use of Funds** | **Amount (ETB)** |
|-------------|---------------------------------|------------------|
| Q1 2024 | Store setup, production launch | 10,000,000 |
| Q2 2024 | Marketing, inventory buildup | 8,000,000 |
| Q3 2024 | Cannes activation | 6,875,000 |
| Q4 2024 | Contingency, scaling | 2,625,000 |
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### **5. Risk Mitigation for Investors**
- **Debt Collateral**: Pledge inventory and receivables to the Development Bank of Ethiopia.
- **Equity Safeguards**: Board seats for major investors, quarterly financial audits.
- **Government Backing**: Leverage Ethiopia’s **Textile Sector Development Fund**, which guarantees 20% of loans.
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### **6. Why This Mix Works**
- **Equity**: Attracts strategic partners (e.g., Ethiopian diaspora investors) who value cultural impact.
- **Debt**: Lowers dilution while leveraging Ethiopia’s low-interest environment (avg. 12% vs. Kenya’s 18%).
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This funding plan balances ambition with pragmatism, ensuring Boaz Trading PLC scales sustainably while delivering competitive returns grounded in Ethiopia’s economic realities.