Académique Documents
Professionnel Documents
Culture Documents
TOPIC
CCBN.com
The CCBN case describes a new business being proposed by Jeffrey Parker, a successful serial entrepreneur. Parker
has teamed up with an HBS MBA, Rod Adler, to develop an Internet-based service for outsourcing the Investor
Relations function within publicly traded companies.
MATERIALS
CCBN.COM (898146)
EC Weeks 1 & 2 Packet
CCBN Poll
ASSIGNMENT
Please fill out the poll. Note that polls will close at 3AM on the day of class. Poll participation will be considered part of
class participation. If you encounter any problems with the poll, please email Evan Richardson at erichardson@hbs.edu
Among the issues you might consider for discussion are the following:
1. In terms of the "fit" between People, Opportunity, Context and Deal, how would you assess CCBN at the time of the
case? What must happen for CCBN to succeed?
2. What can go wrong? What can go right? What can Parker and Adler do to manage the Risk/Reward ratio?
3. What should Parker and Adler do?
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TOPIC
Tickle
MATERIALS
Tickle (N9-807-100)
EC Weeks 1 & 2 Packet
ASSIGNMENT
The founding team at Tickle.com must decide which of several alternatives to choose. Among the issues you might
consider are the following:
?Should Tickle just stick to its knitting and continue to grow with internal funds?
?Should Tickle raise money from the venture capital firm? What do you think of the terms?
?Should Tickle accept Monster?s offer? What are reasonable terms?
?How do you assess the risks and rewards of each option? What perspective are you taking in evaluating the
decision?
?What should James Currier and Rick Marini do?
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TOPIC
Athleta
MATERIALS
Athleta (803045)
EC Weeks 1 & 2 Packet
Athleta Exhibits
ASSIGNMENT
Scott Kerslake, CEO of Athleta, a specialty retailer of women's athletic gear, is trying to raise capital for the firm in
March of 2002. Among the issues you might consider are the following:
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TOPIC
Mt. Auburn Partners Search Fund
MATERIALS
Mt. Auburn Partners Search Fund (805030)
EC Weeks 1 & 2 Packet
ASSIGNMENT
1. Should Rosewater invest in Mt. Auburn Partners? How should he evaluate this opportunity relative to other
investment opportunities?
2. Conceptually, does the search fund model make sense? What can go wrong? What can go right?
3. What is your assessment of the Mt. Auburn PPM? What are the strengths and weaknesses of the plan?
4. What should Rosewater do?
5. What should Milne and Berholz do?
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TOPIC
Beechwood Spouts (A)
Jeremy Ash, CEO of Beechwood Spouts, has developed a revolutionary plastic pouring spout for gable-top and brick
pack juice cartons. With a low cost design, a series of proprietary patents, a large world-wide target market and a
growing order backlog, Spouts appears poised to dominate this emerging packaging industry niche.
Through a mutual friend, Ash has solicited Charles Barker, a respected Boston investment manager, to be an outside
investor in a $6 million private round of growth financing for this early stage high potential venture.
MATERIALS
Beechwood Spouts (A) (396016)
EC Weeks 1 & 2 Packet
ASSIGNMENT
1. Evaluate the deal as described in the case. Is this a good deal for outside investors? Is this round fairly priced? In
addition to the valuation, what other terms and conditions should Barker be concerned with?
2. What additional due diligence should Barker conduct before making his investment decision?
3. How much would you invest in Spouts? If you were Barker, would you recommend this investment to your money
management clients? Why, or why not?
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TOPIC
Venture Capital Valuation
MATERIALS
The Venture Capital Valuation Problem Set
EFRounds.xls
This spreadsheet contains some information related to multiple rounds of financing.
EFNewcoIRR.xls
Analyzing multiple rounds of financing
Warrant analysis
Valuation of options and warrants
ASSIGNMENT
We will go through The Venture Capital Valuation Problem Set in some detail in class. It will be very useful if you create
your own Excel models for the purpose of answering the assignment questions. You should also try to create graphs
depicting the variation in a variable like ?percentage ownership required? as the required rate of return is changed. The
graphs give you a better sense of the sensitivity of the answers to changes in the underlying inputs.
In the assignment you don't need to "solve" question 7 on Togiak Networks. We may not have time to address that
problem in detail in class, but a related spreadsheet will be distributed over the course platform after class. You should,
however, try to figure out what is going on and why the venture capitalist has structured his proposal in that way.A good
resource for VC terms is:http://www.fenwick.com/vctrends/VC_Terms.htm?WT.mc_id=VCS_052307_webpage
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TOPIC
Lecture on Deals
This class session will be devoted to achieving an understanding of some of the key issues in designing deals.
We will distribute copies of a presentation on deals in class. We will spend most of class analyzing a number of deal
terms using the concepts and tools described in the note and paper.
MATERIALS
Note on Financial Contracting: ""Deals"" (288014)
EC Weeks 3 on Packet
ASSIGNMENT
1. What is a deal?
2. What information can be inferred from the terms of a deal?
3. What are the distinguishing characteristics of good and bad deals?
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TOPIC
Term Sheets
MATERIALS
Interactive Term Sheet
This also describes the basic terms sheet and variations in an online format
ASSIGNMENT
ASSIGNMENT
We have a lot to accomplish in these next two class sessions (September 24 and 25). We will go through the term
sheets in the handout one by one: a guide to the critical elements of each exhibit is included below. Note that one goal
of these classes is to have you have in your possession a set of representative documents that have been used with
various ventures. We will not make it through all the term sheets so focusing on Exhibits 1, 2, 6, 7, 10, 11, 12, 14, 15,
16, 18, and 23 will have the highest payoff.
TOPIC
Term Sheet Day 2
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Continuation of discussion
TOPIC
BzzAgent, Inc. - 2005
MATERIALS
BzzAgent, Inc. - 2005 (807-057)
EC Weeks 3 on Packet
ASSIGNMENT
The BzzAgent case describes a set of decisions confronting the management team and early investors in an innovative
word-of-mouth marketing company. The company has decided to raise money in the spring of 2005. Rather than have
venture capital firms submit term sheets, management has created its own term sheet, which it has sent to a number of
prominent venture capital firms. Management asks each potential investor to prove why they should be allowed to
invest. Among the issues you might consider are the following:
1.Does BzzAgents financing strategy make sense? What do you think of the terms they have set? Are they
reasonable?
2.If you were a venture capitalist how would you respond to the letter from Shikhar Ghosh, BzzAgents chairman? Who
will pursue the opportunity to invest? Who will pass?
3.What are the potential future implications of the choices management is making at this time?
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TOPIC
Pinnacle Ventures
MATERIALS
Pinnacle Ventures (808048)
EC Weeks 3 on Packet
Pinnacle Exhibits
We forgot to upload these ....
ASSIGNMENT
1. Conceptually, where on the risk return frontier should venture debt lie in relationship to other private equity (broadly
defined) asset classes? Based on the data in the case, does venture debt seem like an attractive asset class relative
to these others, or not?
2. In what ways does Pinnacles strategy seem to help or hinder its risk-return profile and performance?
3. Evaluate the proposed venture debt financing of Windvane from both Patrick Lees / Pinnacles and Windvanes
perspectives. Specifically, what are the advantages and disadvantages of a standard venture debt loan from the
perspective of each party?
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TOPIC
RighNow
MATERIALS
RightNow Technologies (805032)
EC Weeks 3 on Packet
RightNow Exhibits
ASSIGNMENT
Greg Gianforte, founder and CEO of RightNow Technologies, is confronted with a decision about whether to sell his
company or remain independent. Among the issues you might consider are the following:
1. What value would you assign to RightNow at the time of the case? To answer this question, you should input some
assumptions into the FCF Valuation Model.
2. How should the company respond to the acquisition offer? What would acceptable terms be?
3. If RightNow is not acquired at this time, what financial strategy should it pursue?
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TOPIC
Hudson Manufacturing
MATERIALS
Hudson Manufacturing Company (203064)
Spangler distribution
Hudson Exhibits
ASSIGNMENT
This case discusses the investment and financing decisions of Rock Wood Equity Partners in Hudson Manufacturing
Company. Brett Keith and Owen Colligan have negotiated the purchase of Hudson from its existing owners. Among the
issues you should consider in preparing for class are:
1. Is Hudson an appropriate acquisition candidate for Keith and Colligan? What do Keith and Colligan bring to the table?
2. Is Hudson?s business solid? Is the acquisition price attractive?
3. Evaluate Keith and Colligan?s financing proposal? Does it make sense?
4. What role does the bank play in financing the deal? Why would there be so many banks interested in financing the
deal? Is financing the loan attractive for a bank? Why?
5. How should Keith and Colligan deal with environmental contamination? Should they walk away?
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TOPIC
MD Beauty, Inc.
Financial strategy
MATERIALS
MD Beauty, Inc. (806045)
EC Weeks 3 on Packet
Financial Statements
ASSIGNMENT
The chairman and CEO of a successful cosmetics company must decide whether they should try to sell their company
in the late spring of 2003. Among the issues you might consider are the following:
1. Why has the company been successful? What are its prospects?
2. What value would you assign to the company at the time of the case?
3. Why has the company been unable to attract strong interest from a strategic buyer?
4. Should they try to attract a private equity investor? If so, who should they go after? What are reasonable deal terms?
5. What should John Hansen and Leslie Bodgett do?
TOPIC
Hamilton Test Systems
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TOPIC
Khosla Ventures: Biofuels Strategy
Venture capitalist Vinod Khosla believed it would take significantly more than consumers buying hybrids to alter the
trajectory of global warming. He was set on a much larger goalhe wanted to fundamentally change the way in which fuel
was manufactured and consumed not only in the West, but also in India and China. Cost effectiveness and affordability
were critical criteria in developing a low carbon solution that impacted 50-80% of the next billion cars shipped
worldwide.
MATERIALS
Khosla Ventures: Biofuels Strategy (809004)
EC Weeks 3 on Packet
ASSIGNMENT
1. Should Khosla Ventures start a later-stage investment fund for scaling their biofuels ventures? Why and Why not?
2. Please spend some time on exhibits 10 and 11. You should think about the possible returns available to each
investors in each round. Whats an appropriate required rate of return at each stage? Who invests in that kind of payoff
structure? How much might the hypothetical biofuels company be worth if it hits the numbers on exhibit 11? What
happens if Khosla Ventures cant invest its prorated investment at each stage
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TOPIC
Calera
Brent Constantz, founder, CEO, and president of Calera Corporation, felt a surge of optimism as he gazed at the
recently commissioned prototype flue gas processing line at Caleras R&D facility in Moss Landing, California. It was
late May 2009, and Calera was an early-stage venture-backed company headquartered in Los Gatos, California with a
promising vision to reverse global warming and ocean acidification by adapting one of natures oldest processes:
carbonate mineralization.
MATERIALS
Calera Corporation (810-030)
Spangler distribution
Webcast of May 6 the U.S. Senate Energy & Water Hearing on Applications for the Reuse
of Carbon Dioxide
Brent Constantz's testimony can be viewed starting around 67 minutes into the hearing.
Synthesis Report from Climate Change, Global Risks, Challenges & Decisions,
COPENHAGEN 2009, 10-12 March (Optional)
Carbon Trading on the Cheap, by Peter Fairley (Technology Review; Jul/Aug2009, Vol.
112 Issue 4, p72-75, 4p) (Optional)
The article discusses the issue concerning the cap-and-trade system introduced in the U.S. Congress. It examines the
impact of the Emission Trading System (ETS) of the European Union (EU) on the country's carbon-trading scheme
which proposes to cut greenhouse gas emissions to 17% below 2005 levels by 2020. It also looks into several factors
that affect the EU's emission trading system which include bad information, the coddling of domestic industries and the
economic downturn. It further explores the impact of politics on efforts to improve the EU trading scheme.
ASSIGNMENT
1. What is the opportunity confronting Calera?
2. What can go wrong? What can go right? What can management do to improve the reward to risk ratio?
3. Review Exhibits 13, 14 and 15. How much money does the company need and when does it need it? From whom
should the money be raised? For what purpose? On what terms?
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TOPIC
DOE & the Recovery Act
It was October 26, 2009, and Matt Rogers walked back to his office at the U.S. Department of Energy (DOE). Nine
months earlier, Rogers had left a career as head of McKinseys North Americas Petroleum practice, and founder of its
Clean Energy practice, to take a job in the U.S. Government, working for DOE Secretary Steven Chu as the Senior
Advisor for Implementation of the American Recovery and Reinvestment Act (Recovery Act). From a firm that had led
thinking about the worlds energy future and advised leading Fortune 500 companies, his new role was to implement the
largest and most ambitious transformation of Americas energy system since World War II. He was surprised at how
much the DOE and Recovery teams had gotten done and but , more importantly, he wondered how effective it would
all prove to be.
MATERIALS
U.S. Department of Energy & Recovery Act Funding: Bridging the "Valley of Death" (810144)
ASSIGNMENT
1. What exactly is the valley of death that these government financing programs seemed designed to address? Do
you agree with the arguments in the case about why these market imperfections exist? Do you believe that these
programs are an effective way of addressing these financing issues? Do you see any alternatives for dealing with these
issues? What negative consequences, if any, do these programs have on the private sector?
2. What should happen / what should the DOEs role in financing these industries be once the ARRA funding has
been fully-deployed? Assuming normal financial markets and a reasonably healthy economy, what issues in the energy
space do you think will nonetheless benefit from targeted government funding programs?
3. How (and over what time frame) should Matt Rogers and his team measure their success?
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TOPIC
Highland Capital Partners -Cleantech
One day during the summer of 2008, Paul Maeder, co-founder and general partner of Highland Capital Partners (HCP),
was walking with his wife around Reykjavik, Iceland, marveling at how clean the city felt and at the widespread use of
naturally occurring geothermal energy to power everything from trams to buildings. They dont treat their air and water
like an open sewer, Maeder thought. This is the way people need to live and this is the way people are going to have to
start living in 10 or 20 years. To his wife, Maeder said aloud: I think Highland should revisit the idea of investing in
cleantech.
MATERIALS
Paul Maeder's "Green" Measures of Economic Success
ASSIGNMENT
1. Will Highland Capital cleantech investment model let them be a successful participant in cleantech investing in the
next 5 years? Why and Why not?
2. How are Khosla Ventures and Highland Capital approaches the same and different?
TOPIC
BlingNation
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TOPIC
Gilt Group
TOPIC
Distrobot
MATERIALS
Distrobot Systems, Inc. (805-082)
EC Weeks 3 on Packet
Distrobot
ASSIGNMENT
Mick Mountz, the founder and CEO of a new company focused on warehouse automation, must raise additional capital
to commercialize his idea. Among the issues you might consider are the following:
1. What is the nature of the opportunity confronting Distrobot? What must the company do to succeed?
2. Do you think Steve Kaufman (former CEO of Arrow Electronics) is correct in his assessment of the marketing
challenges facing the company? How should Mountz and his team interpret the feedback?
3. From whom should Distrobot raise capital? How much? On what terms?
4. How would you respond to the term sheet Distrobot has received from Poronui Capital Partners?
5. Should Mountz try to raise capital from potential customers, as per Exhibit 9?
6. What should Mick Mountz do?
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TOPIC
OfficeTiger
Randy Altschuler and Joe Sigelman, the co-CEOs of OfficeTiger, made the final changes on their presentation for their
first-quarter 2004 board meeting the next day and sat back to discuss the meeting. At the top of the presentation would
be a discussion of new investors who had the potential to finance acquisitions for Office Tiger. Altschuler and Sigelman
knew that the whole outsourcing bubble would burst someday..but hopefully not anytime soon.
MATERIALS
OfficeTiger (804109)
EC Weeks 3 on Packet
"Define the Battle: Positioning." Chapter 6 from Crossing the Chasm , by Geoffrey A. Moore
This is an optional reading. This is from the latest edition of Moore's "classic," Crossing the Chasm. Read pages 152 -
156. Moore's terminology is still (after more than twenty years) the lingua franca of new product marketing.
"Crossing the Chasm--And Beyond", Chapter 2 from Inside the Tornado , by Geoffrey A.
Moore, pgs 13-26.
This is an optional reading. This acts as a summary of the customer adoption model described in Moore's first book,
Crossing the Chasm. Read pages 13 - 26. We recommend reading both of Moore's books, Crossing the Chasm and
Inside the Tornado, in their entireties. Nearly everyone has benefited greatly from doing so.
ASSIGNMENT
1. What has made OfficeTiger successful to date?
3. Who were OfficeTiger's first "big" customers? Why did they buy from OfficeTiger?
5. What has OfficeTiger done to make itself highly valued by its customers?
6. How can OfficeTiger best exploit, or under some scenarios, survive, the coming changes in the outsourcing
business?
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TOPIC
Dr. Johns Products, Ltd.
The Dr. John?s Products, Ltd. Case describes a set of decision confronting the management team at a rapidly growing
manufacturer of inexpensive electric toothbrushes.
MATERIALS
Dr. John's Products, Ltd. (N9-803-063)
EC Weeks 3 on Packet
ASSIGNMENT
1. What do you think of John Osher?s process for identifying opportunities and building companies?
2. What is the nature of the opportunity confronting Dr. John?s at the time of the case?
3. What can go right? What can go wrong? What can management do to improve the risk/reward ratio?
4. What value would you assign to Dr. John's at the time of the case?
5. What should Osher and his colleagues do?
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TOPIC
NovoCure Ltd.
The class concerns raising capital for a new cancer therapy company.
MATERIALS
NovoCure Video
This video contains patient testimonials from Europe.
Novocure, 810-045
ASSIGNMENT
NovoCure has developed a novel treatment for certain cancerous tumors. Preliminary results from clinical trials for
treatment of recurrent and newly-diagnosed brain tumors have been encouraging. The company needs to raise
additional capital to fund pivotal (Phase III) clinical trials. The context for raising capital in late 2008 is challenging.
Among the issues you might consider are the following:
2. How much money should the company raise? From whom? For what purpose? On what terms?
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TOPIC
Endeavor: Creating a Global Movement for High-Impact Entrepreneurs
MATERIALS
Endeavor: Creating a Global Movement for High-Impact Entrepreneurship (810049)
Spangler distribution
Updated Exhibit 22
ASSIGNMENT
Endeavor is an organization that attempts to accelerate high potential entrepreneurship in emerging markets. When
Endeavor establishes operations in a country, they orchestrate an annual competition for selection of a small number of
Endeavor Entrepreneurs who will receive a wide range of assistance in their business. This case focuses on an
International Selection Panel that took place in 2008 in Jordan. Among the issues you might consider are the following:
1. How would you assess Endeavor's model for encouraging entrepreneurship in emerging markets?
TOPIC
Spudnik
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Wrap-up
Wrap-up
TOPIC
Innocent Drinks
This case describes some strategic options confronting the owner-managers of a beverage company based in London.
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TOPIC
Final Lecture
Summary
ASSIGNMENT
Today we will have course evaluations at the end of each session. Please be sure to bring your laptops as the
evaluations will take place online
For the last class, it will be helpful if you go back through your materials and notes and focus on the people, opportunity,
context and deal in each venture we have studied. What lessons can you discern from what happened in each
situation? In addressing the latter topic you might ask:
What decisions could have been made before the fact that would have helped? After the fact?
What questions could have been asked that would have been helpful in avoiding mistakes or making better decisions?
How can you make sure that you apply the wisdom acquired through this course and subsequent experience in the
future?
End of Wrap-up
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