Spotfire: Managing a Multinational Start-up Case Study Solution
Spotfire expects to raise additional capital. How much is needed? Under what terms should it raise capital?
Required Additional Capital:
The financing of approximately $ 750000 has been raised by the company through Innovations Kapital. In return for this financing; the venture capital organization has acquired a stake of around 46% in the equity of Spotfire. The first round of the company’s financing was completed in the August of 1997, and the company had successfully raised $616486 and $2465966 from Innovations Kapital and Atlas Ventures, respectively. Now the company is set for the next round of financing. According to the assumptions as well as the estimations of Ahlberg; the next round of financing that would be required by the company,is dependent on the company’s headcount. If we look at the growth of the headcount, then it could be seen that the marketing headcount is the area, which is expected to grow significantly with an average growth of 111% over the estimated period of 1998 to 2000. Except the management headcount, all other headcount numbers, including the people in administration, sales, customer service and development would be growing rapidly over the course of the business. Furthermore, the company is looking forward to introduce new products in the market, so that it could increase its customer base and meet the objectives of the large scale. Also, the company would require external funds to develop its internal infrastructure. Therefore, based on the needs; the required external financing under the second round should be around $6 million to $ 8 million.
Terms and Conditions:aa
The company had given a considerable piece of equity of around 46% to the Innovations Kapital in its first round of financing. This is so, because the company’s management did not have many alternatives to avail at that time. On the other hand, the management also believes in the skills of Innovations Kapital in building the Swedish Ventures. However, now the company’s management is not willing to give up equity in return for the required financing. Nonetheless, stock options have also been set aside for the second round of financing, which are equal to the value of 20% of the company’s equity. Therefore, Spotfire could approach the VCs to discuss the second round of the financing.
The terms of the second round of financing could be discussed with the Sweden based Innovations Kapital and Atlas Venture, following which the company’s management could form an affiliate with the DLJ’s venture capital, in order to make the second round of financing of about $6 million to $ 8 million, successful. The terms should emphasize over the stock options and a seat on the board of the company, but none of the equity should be provided to the venture capital investors.
The financing that is expected to be raised by the company under the second round would be used by the company’s management to support its expansion strategy on a global scale. The company would not just be expanding into the vertical industries but also in the pharmaceutical market. This is so, because most of the pharmaceutical companies in the international market are using the Spotfire’s bioinformatics software.Therefore, now the company’s objective is to broaden and deepen that relationship with the companies, so that it could meet all the needs of the pharmaceuticals industry by supporting their decision support systems....................
This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.
Related Case Solutions & Analyses:
10 Insights: First Look at The New Intelligent Enterprise Survey on Winning With Data & 10 Data Points: Information and Analytics at Work
Michelle Levene (C)
Euro-Dollar Decision (A)
Hotbank: Softbanks New Business Model for Early Stage Venture Incubation
Lance ArmStrong
Hess LNG: Responding to Community Opposition
Star Appliances
The Story of Samsung
Five Guys: Developing A Promotional Strategy For The Future
Comic Sans
