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Venture Capital Vignette Case Study

Venture Capital Vignette Case Study. By MTiPO : Desiree Fabunan Yee Han Kuan Svyatoslav Mishchenko Patrick Lin Ngai Lung Wenhan Zhou. Analysis Tools. Competitive Analysis (SWOT) Include feedback from customers and potential customers Analysis of trends and demographics

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Venture Capital Vignette Case Study

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  1. Venture Capital Vignette Case Study By MTiPO: Desiree Fabunan Yee Han Kuan SvyatoslavMishchenko Patrick Lin Ngai Lung Wenhan Zhou

  2. Analysis Tools • Competitive Analysis (SWOT) • Include feedback from customers and potential customers • Analysis of trends and demographics • Compare to Sarah's marketing strategy • Approach select trusted board members for opinions • Don't involve a divided, dissonant board "The Product is Great But Nobody Is Buying"

  3. Addressing the Problem • If CEO is ignoring Sales Manager's advice: • figure out why • explain analysis of current situation • establish Sarah's authority on Sales • If Sales strategy problem: • Re-assess Sarah's strategy given completed analysis • Address strategy changes with board "The Product is Great But Nobody Is Buying"

  4. The Board’s Involvement • Assuming Sarah is correct... • Evaluate how Sales strategy is handled internally • Make changes to address these issues • Re-evaluate Tuck's responsibilities to address conflicts of opinion regarding Sales strategy "The Product is Great But Nobody Is Buying"

  5. Deciding if WDL is a Good Money Tree "Ante Up or Fold"

  6. To Get Good Money by Investing Good Money Liquidation Preference(3.375X) to Protect Downside Participating Preferred so that VC can get Upside from investing in a down round "Ante Up or Fold" Capped Liquidation (50 Million) so that Management is still motivated to perfrom 2.5 Million to be invested in Tranches

  7. Ensuring the Good Money Stays good Motivating Management Vesting Schedules for Nonqualified Options: -Equally over 4 Years with first year cliff -To retain management to successful exit and post Exit Strike Price = Share Price for this Round -Ensure that management is motivated to increase stock price Current Salary Reduced -Reduce Compensation so that there is buffer cash to reach next round -Restore Salary when company makes a profit or get next round of funding Ensuring a Good Investment -Go for Board meeting -Be committed to the company` -Seek series C investment -Help to build Sales Team -Seek Consultants for Commercialization of technology -Assist company by using personal network "Ante Up or Fold"

  8. What makes a good board of directors? • Balance of power between VCs & Founders. • Good mix of expertise • Committed to the company. • Synergy within the board • Wide network and influence. • Ability to bring in cash when necessary. • Increase company credibility. • Clear understanding of the operational, and strategic plans of the company • Industrial experience and knowledge. • Visionary "Ponderant Technology"

  9. How should the issue be resolved? Solution: Bring in Craig into the board and move Mark Segras to the unaffiliated position for a fixed period (6 months) until the company finds a suitable candidate as the “marquee” director. Essential board members: • Craig: the major investor in the current round of funding. • Dan: CEO of the company, knows best about the company. • Hardy & Don: Co-lead investors, need to know where the money channels into. Rational for Jennifer to be the 5th board member: "Ponderant Technology"

  10. How should Dan best make that resolution happen? • Talk to Rockwell Intl about the change of board of directors. To prevent any dispute/conflict on Intellectual Property rights (IP) • Talk to Mark prior to the changes. Explain to him the rationale behind the decision. • Talk to other board directors to seek consent/views. • To seek approval from the board about the plan for putting Mark as the unaffiliated board member. "Ponderant Technology"

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