...Case Assignment #6: Sendwine 1. Imagine that you are a Venture Capitalist in 1999 and that you have been asked to invest $30 million “B” round for Sendwine.com. Would you invest? What criteria would you use to make your decision? How is Sendwine position against those criteria? If I was a venture capitalist in 1999 and I was asked to invest $30 million for Sendwine.com I would be a little skeptical at first. The internet was fairly new at that time and there was a lot of uncertainty around it. People weren’t sure if the older generation would learn to adapt to it and people weren’t sure if it was going to last in the future years. Some people simply viewed it to be a new fad but if they knew how much it would expand over the coming years they would surely invest in it. If I was a venture capitalist, I would consider the investment with the rest of my team and I would look at all of the alternatives I could invest my money in. I would look at the rise of the internet and make an informed decision about whether it was going to fade away or burst into the limelight. I would look at Sendwine.com’s previous investors, as well as their previous years’ profits. I would also look at the future path that Sendwine is looking to pursue and see what they are going to be doing with my $30 million. I would consider Sendwine’s operations and see how they run their business from the start of the product to the end result when the customer receives it. Sendwine is positioned very well along...
Words: 1259 - Pages: 6
...cohorts at Avant! pay for what they did. He was determined to see justice. While some industry mates chose to ignore what had happened and advised him to turn the other cheek, it was something that would not allow Joe to let up, and rightfully so. He also seems to be somewhat naïve. This opinion is founded on the ground that he did not give any ultimatum for the employees who refused to sign a document that make them contractually obligated to “respect Cadence’s trade secrets” (Bygraves, 2011). While it was awful convenient that Costello was so insistent on taking down a fierce competitor, the fact remains that its foundation rests upon stolen information. The thing that adds insult to injury for Costello is that this was all done at the hands of a former employee that he worked alongside for years. He seems to be equally outraged by everyone who seems to be nonchalant about Avant!’s behavior. B. Gerry Hsu- Gerry was the VP of Cadence before resigning to join the Avant! startup. He was preceded in resignation by four other employees three years earlier. It is apparent that Gerry had ill intentions from the time he left Cadence, because of advising Costello he was leaving to join another company, he lied and said he was “taking time off at the beach” (Bygraves, 2011). While it can be understood why he would not want to outright divulge that he was going to a competitor, Costello asked him directly and he deceived him. The word that comes to mind when I think of Gerry is “resourceful”...
Words: 1158 - Pages: 5
...5 Success mantra 6 Appendices 8 Venture Capitalists tell their story: Arthur Rock on Steve Jobs 8 Preliminary confidential offering memorandum 9 Bibliography 10 Executive summary This report highlights the start of the entrepreneurial journey of Steve Jobs – the founder of Apple. The Apple journey started off as a partnership. Steve Jobs and Steve Wozniak had been friends for some time, having met in 1971, when their mutual friend, Bill Fernandez, introduced 21-year-old Wozniak to 16-year-old Jobs. Jobs managed to interest Wozniak in assembling a machine and selling it. They bootstrapped for the first product – Apple I. Mike Markkula was the first angel investor who showed belief in the product and the team. Markkula had made his fortune as a marketing manager at Fairchild Semiconductor and Intel, retiring at age 32. In 1977, Steve Jobs met with Markkula and convinced him that personal computers were an exciting opportunity. Markkula invested $250,000 in Apple for a one-third stake in the company and served as president from 1981-83. With Mike’s guidance and funding Apple ceased to be a partnership and was incorporated on April 1, 1976. Apple investors had a traditional exit through an initial public offering in 1980. When Apple went public, it generated more capital than any IPO since Ford Motor Company in 1956 and instantly created more millionaires (about 300) than any company in history. Several venture capitalists cashed out, reaping billions in long-term...
Words: 3280 - Pages: 14
...VENTURE CAPITAL -- AN OVERVIEW OF THE BASIC ISSUES AND CHALLENGES FOR ENTREPRENEURS A NETPRENEUR.ORG SPECIAL REPORT AUGUST 2001 PREPARED BY: ANDREW J. SHERMAN, ESQ. ANDREW J. SHERMAN, ESQ. MCDERMOTT, WILL & EMERY 600 13TH STREET, N.W. WASHINGTON, D.C. 20005 (202) 756-8610 (202) 756-8087 (FAX) AJSHERMAN@MWE.COM (E-MAIL) WDC99 474195-1.T06139.0012 INTRODUCTION At several recent Netpreneur.org Coffee & DoughNuts events, including the May 23rd program on Ratchets, Cramdowns and Other Scary Venture Capital Terms as well as the recent Startup.com film event on July 17th, many members of our Netpreneur community posed questions on the fundamentals of structuring venture capital transactions, including many that time prevented the panel from addressing. Clearly there is a lot of interest in this topic among our region's technology entrepreneurs, but there is also a lot of confusion. Rather than deal directly with the dozens of specific questions posed at these two events, this Netpreneur.org special report will provide an overview of some case concepts which I hope will be helpful to you in the growth and financing of your business. OVERVIEW AND HISTORY OF VENTURE CAPITAL Today's institutional venture capital industry has its roots at the turn of the twentieth century, when wealthy families like the Rockefellers and DuPonts provided risk capital to small growing companies. Following World War II, a few institutional venture capital companies were formed, the most...
Words: 6878 - Pages: 28
...9-800-228 REV: APRIL 28, 2010 KATHLEEN MCGINN NICOLE TEMPEST He eidi Roi izen eidi Roizena venture capitalist at Softbank V Venture Capi ital (Softban nk) and a fo ormer He entrep preneursat back at her o oversized des in her hom office in A sk me Atherton, California, and lo ogged onto h computer It was a typ her r. pical morning for her; she had received 40 e-mails overnight. An g d nother 100 or so would co r ome in over th course of t day. Am he the mong her e-ma ails, Roizen re eceived an av verage of 10 b business plan per daya ns almost all refe errals from pe eople she knew in the high w h-tech industry y. Ro oizen had spe the first decade of her career activel building h network in order to hel the ent ly her n lp softw ware company she co-found y ded, T/Maker compete ag r, gainst better-c capitalized software develo opers. Throu her roles as CEO of T ugh T/Maker, pre esident of the Software Pu ublishers Asso ociation, and later, vice p president of worldwide developer re elations at A Apple Compu uter, Roizen had develop ped a netwo that inclu ork uded many of the most po owerful busin ness leaders i the techno in ology sector. Over the y years, Roizen had also m n mastered the skill of blen nding professional netwo orking with social netwo orking; she was well-know throughou Silicon Va w wn ut alley for hosti ing dinner pa arties at her h house that in ncluded the li ikes of Bill Ga of Micros and Scott McNealy of Sun Microsys ates soft t stems. An outgoin...
Words: 8672 - Pages: 35
...existing shareholders / management have approached you with a view to considering an MBO (considering an exit?). In the extreme case if you approach the wrong person they immediately may regard you as a threat and this could have consequences for your existing position. STEP 3 - First Approaches and Completion of Confidentiality Agreements In order for you to be able to talk to your professional advisors, the target company will require you to sign a confidentiality agreement so certain information can be released to your professional advisors and yourself. STEP 4 - Deciding on the MBO Team Generally, MBO's are driven by one to two senior management. An important part of the process which we will assist you in is to try to determine what other key members of the management team you should include. The seller will generally appoint their own advisors to assist them in the negotiations. The possible negative effects of not choosing certain members will have to be examined and the split of shareholding between the management team will have to be agreed. It is probably best for the main drivers of the MBO to go as far down the process as possible before introducing other key members of management. STEP 5 -...
Words: 920 - Pages: 4
...How Venture Capital Works by Bob Zider Harvard Business Review Reprint 98611 HarvardBusinessReview NOVEMBER – DECEMBER 1998 Reprint Number Michael e. porter CLUSTERS AND THE NEW ECONOMICS OF COMPETITION 98609 daniel golem an WHAT MAKES A LEADER? 98606 carl shapiro and hal r . varia n VERSIONING: THE SMART WAY TO SELL INFORMATION 98610 stewart d. friedm an, perry christensen, and jessica d e gro ot WORK AND LIFE: THE END OF THE ZERO-SUM GAME 98605 bob zider HOW VENTURE CAPITAL WORKS 98611 henry mintzberg COVERT LEADERSHIP: NOTES ON MANAGING PROFESSIONALS 98608 andy bl ackburn, m at t halprin, HBR CASE STUDY THE CASE OF THE PROFITLESS PC 98603 and ruth veloria ja mes c. anderson and james a. narus idea s at work bill gross first person BUSINESS MARKETING: UNDERSTAND WHAT CUSTOMERS VALUE THE NEW MATH OF OWNERSHIP PETER F. DRUCKER 98607 hbr cl a ssic THE DISCIPLINE OF INNOVATION peter l . bernstein 98601 98604 bo oks in review ARE NETWORKS DRIVING THE NEW ECONOMY? 98602 Before you can understand the industry, you must first separate myth from reality. HOW VENTURE CAPITAL WORKS BY BOB ZIDER nvention and innovation drive the U.S. economy. What’s more, they have a powerful grip on the nation’s collective imagination. The popular press is filled with against-all-odds success stories of Silicon Valley entrepreneurs. In these sagas, the entrepreneur...
Words: 6057 - Pages: 25
...Preliminary and incomplete Do not quote without authors’ permission How Do Venture Capitalists Choose Investments? by Steven N. Kaplan and Per Strömberg* First Draft: August 2000 This Draft: August 2000 Abstract In this paper, we consider how venture capitalists (VCs) choose or screen their investments by studying the contemporaneous investment analyses produced by 10 venture capital firms for investments in 42 portfolio companies. Consistent with most academic and anecdotal accounts, we find that it is common for VCs to consider explicitly the attractiveness of the opportunity – the market size, the strategy, the technology, customer adoption, and competition – the management team, and the deal terms. We also provide evidence on how the venture capitalists expect to monitor those investments. In at least half of the investments, the VC expects to play an important role in recruiting management. Finally, we complement the investment analyses with information from the financial contracts for the investments and consider the relation of the analyses with the contractual terms and with subsequent performance. In both analyses, the evidence suggests that the VC’s initial appraisal of the management team is important. Stronger management teams obtain more attractive contracts and are more likely to take their companies public. G24: Investment banking; Venture Capital; Brokerage G32: Financing policy; Capital and ownership structure * Graduate School of Business...
Words: 12264 - Pages: 50
...Sahlman Few areas of business attract as much attention as new ventures, and few aspects of new-venture creation attract as much attention as the business plan. Countless books and articles in the popular press dissect the topic. A growing number of annual business-plan contests are springing up across the United States and, increasingly, in other countries. Both graduate and undergraduate schools devote entire courses to the subject. Indeed, judging by all the hoopla surrounding business plans, you would think that the only things standing between a would-be entrepreneur and spectacular success are glossy five-color charts, a bundle of meticulouslooking spreadsheets, and a decade of month-bymonth financial projections. William A. Sahlman is Dimitri V. d’Arbeloff Professor of Business Administration at the Harvard Business School in Boston, Massachusetts. He has been closely connected with more than 50 entrepreneurial ventures as an adviser, investor, or director. He teaches a secondyear course at the Harvard Business School called “Entrepreneurial Finance,” for which he has developed more than 100 cases and notes. Nothing could be further from the truth. In my experience with hundreds of entrepreneurial startups, business plans rank no higher than 2–on a scale from 1 to 10 – as a predictor of a new venture’s success. And sometimes, in fact, the more elaborately crafted the document, the more likely the venture is to, well, flop, for lack of a more euphemistic word. What’s...
Words: 6958 - Pages: 28
...GM 591Leadership and Organizational Behavior 6-19-2011 Introduction: PHSI is a water filtration manufacturer and distributer, located in Vernon Hills Illinois. The company employs around 85 employees through the United Sates, Korea, and Europe, with the majority of them in the United States. The company added a significant amount of employees after it was acquired by a venture capitalist company in late 2009. PHSI started as a small company in Sandpoint Idaho, in early 1999 with 3 employees two of them are the owners of the company. The company started as the distributer of water machine filtration systems and grows to be the owner of the manufacturing company in Korea. After acquiring the manufacturing plant in Korea PHSI management decided to expand its business through a network of dealer to distribute its product throughout the United States without having the burden of a sales department, and PHSI role would be to support the dealer network through securing a financing source to buy the contracts off of the dealer hands and do the collections and cash management for them. This was not an easy task since the collateral was not of a significant value to the banks and PHSI had to guarantee the payments to the banks through a system called perfect pay. This agreement guarantee’s that the bank will withdraw the amounts being billed through a lockbox system, regardless of payments coming in from the customers. As the business grows, PHSI losses grip on the day to...
Words: 2481 - Pages: 10
...An analysis of business behaviour in Zhongju Logistics 1.Introduction: 1.1 Background about Zhongju Logistics: Zhongju Logistics is a small company which the headquarters is located in Shanghai, it was founded in 2001, and it has 42 employees currently. The company provides professional transportation, warehousing, transshipment, distribution services for the enterprise and supermarket. The Early aim of the company is to make special line of hazardous material hazardous material(Such as gasoline, explosives, strong acid, strong alkali, benzene, naphthalene, celluloid, peroxidase and so on) transport of goods between the Yangtze river delta to the pearl river delta, with brand building as the foundation, to promote a nationwide business (Zhongju’s Website, 2013). At the moment, although Zhongju is a small company, the company’s Corporate vision is Rapid growth as a typifier of hazardous material transport logistics industry in China. During these recent years, Zhongju Logistics has developing very slowly. Ming Li, as one of the top managers of the family company, running his family business in Guangzhou, the main different part is, his parents are focus on Shanghai area, his older brother focus on Huizhou, and he pay more attention to Guangzhou. Even so, they usually cooperate with each other in same business which can reduce the cost. Zhongju logistics running its business mainly among Guangdong province, Shanghai, Jiangsu province...
Words: 2171 - Pages: 9
...Images (ISI) had been building a satellite to image the world at a resolution of one meter. At the resolution, a trained photo interpreter could identify virtually any military and civilian vehicle as well as numerous other military and non-military objects. The ISI team had been preparing a proposal for a Japanese government contractor. The contract called for a commitment of a minimum imagery purchase of $10 million per year for five years. In a recent executive staff meeting it became clear that the ISI satellite camera subcontractor was having trouble with the development of a thermal stabilizer for the instrument. It appeared that the development delay would be at least one year and possibly 18 months. When Jim approached Fred Ballard, the President of ISI, for advice on what launch date to put into the proposal, Fred told Jim to use the published date since that was still the official launch date. II. External Environment: A. General Environment: For the problem ofISI satellite camera subcontractor it appeared development delay would be at least one year and possibly 18 months. For that reasonthe level of trust between the parties was very low since the Japanese insisted upon completion guarantees. External forces include: Industry practice is to publicize optimistic completion dates that are rarely met. The financial industry that has profitability expectations which may be impossible to meet if realistic information is provided. B. Industry Environment: Companies...
Words: 1444 - Pages: 6
...------------------------------------------------- CHAPTER 8: BUSINESS PLAN WHAT IS THE BUSINESS PLAN? The business plan is a written document prepared by the entrepreneur that describes all the relevant external and internal elements involved in starting a new venture. It is often an integration of functional plans such as marketing, finance, manufacturing, and human resources. It also addresses both short-term and long-term decision making for the first 3 years of operation. Thus, the business plan – or as it is sometimes referred to, the game plan or road map – answers the following questions: * Where am I now? * Where am I going? * How will I get there? Potential investors, suppliers, and even customers will request or require a business plan. If we think of the business plan as a road map, we might better understand its significance. Let’s suppose you were trying to decide whether to drive from Kumasi in Ghana to Tripoli in Libya (mission or goal) in a car. There are a number of possible routes, each requiring different time frames and costs. Like the entrepreneur, the traveller must make some important decisions and gather information before preparing the plan. The travel plan would consider external factors such as emergency car repair, weather conditions, road conditions, sights to see, available campgrounds, and so on. These factors are basically uncontrollable by the traveller but must be considered in the plan, just as the entrepreneur would...
Words: 7377 - Pages: 30
...Air Case, we provide a superior service at a lower price, targeting an infinite market of potential consumers. My venture aims to solve issues related to mobile battery usage, acknowledged by the fact that society has become increasingly dependent on the capabilities of our particular smartphone carriers. The problem I aim to address can be categorized as an economically friendly alternative to purchasing expensive portable chargers as well as the convenience of having a wireless charging application in the palm of your hand. The number of individuals impacted pertains to anyone with a smartphone. According to comScore, an American Internet analytics company that provides marketing data and analytics to many of the world's largest enterprises, agencies, and publishers, the United States holds nearly 160 million smartphone users. In addition, over 30% of smartphone users own a supplemental charging device. These chargers range from $25 up to $100. My application aims to sell for $5 in the App Store, exhibiting a tremendously cost-saving alternative to competitor products. My solution is to provide customers with a subtle and simplistic application that allows battery sharing between multiple mobile devices. The true value delivered to my customers can be seen through the elimination of stress and other personal complications that tend to arise when our mobile power is low or completely diminished. This product is sharing application; therefore it can only be used...
Words: 3940 - Pages: 16
...and more on company’s campus). Keeping its customers satisfied * Listen and analyze feedbacks, advice etc., create conferences for customers, collaboration with a customer to invent new solutions, build long-term relationships, etc. Subscription-plan business model. * Tap into the creative talents of your customers instead of looking just to your workers for new ideas. * Nurture long-term relationships with users and employees alike. Creativity is the raw material that goes into innovation. Reading 2: Recognizing Opportunities and Generating Ideas BENCHPREP: be familiar with what the company does; how it was launched; the characteristics of the business opportunity when the BENCHPREP was launched * Company provides cross-platform apps to help students prepare for standardized tests (GMAT, SAT, MCAT, etc.). * Launched at the perfect time (not too early-not to late) when IPhone was introduced and apps were just gaining popularity. Done by two friends (ASHISH RANGNEKAR AND UJIWAL CUPTA). * Timing was perfect. The first GMAT perp app. Opportunity Evaluation Framework: be familiar with its five key characteristics as discussed in class, their meanings and the key questions behind each characteristic (source: lecture, book chapter) 1. Product: anchored in a product, service or business that adds...
Words: 2805 - Pages: 12
