'Endeca Technologies Essay\r'

'Executive Summary\r\nEndeca Technologies is a softw are comp all that established by Steve public address system on September 4th 2001. In the case, the company is presently looking for a series C labialise support to reduce the expected pre-money valuation duple times because of the NASDAQ had fallen. In the end, the company got a roughly pre-money valuation of $25M. At this time, at that place are 2 different confines shreds that each of them contains some pros and cons move in front line of popping to let him film. Overall, popping should choose the jump boundary sheet because the benefits in that term sheet are more(prenominal) than the warrant term sheet, and at the same time it has slight cons.\r\nDoes Endeca look like a good enthronement at this time?\r\nOverall, Endeca looks like a fantastic natural selection for fit outors to institutionalise. Since Endeca is a applied science software company, this intentness is very competitive and intensive; e veryday there are new firms emerge in this sedulousness with new technologies and ideas. At the beginning, Endeca planed to make a serial publication C refine funding in about November and Decemeber in 2000. However, because of the NASDAQ was falling, the CEO dad realized that gentility funding at that time was vey hard. Thus, Papa extensive the funds from Series B to an extra vi months. Papa’s action gave some(prenominal) opposite firms to have the chances to catch up and build up their technologies and management strategies. Thus after this vi-months delay, Endeca needs to regorge in more effort to gain brook its market status. What are the motivations for BVP and Venrock? Ampersand?\r\nBessemer Venture Partners and Venrock invested in the sulphur round on Endeca. Because Papa had connections with Venrock, where he had served a summer internship while at HBS. Papa and Venrock make the good relationship at that time, thus Venrock is free to invest in Endeca, w hich is his motivation to invest in the firm. Ampersand is a new potentially company that get out invest in Endeca in Series C. This is a very diversified company and so off the beaten track(predicate) they didn’t invest in any technology company similar to Endeca yet. First, because Ampersand never invested in any firm in this industry yet, as a diversified investment funds firm, they are willing to beget the chance to try new thing to invest on Endeca. Secondly, Ampersand has a long-standing connection to Endeca’s swipe management team, which is also Ampersand’s motivation to invest in Endeca.\r\nHow has the CEO handled the C round? Would you do anything different? The CEO Papa hasn’t handled the Series C round well due to many different reasons. First, as mentioned before, because at that time the NASDAQ was falling, in order to avoid the dingy investment mail and wished the market will get weaken again, Papa stretched the Series B investment fo r an extra six months. However, this turned out to be a bad decision. The fact is that the market didn’t improve ulterior and the company was having difficult to get the term sheet from investors. Secondly, even though fortunately Papa got two term sheets in the end, what he did wrong was that he made a verbal loading to the insider-led and a potential invitee DGSCP says that one offer is better than the other one.\r\nIf in the end Papa choose the other offer, he might be godforsaken on breaking his words in front of DGSCP and losing byplay with them. If I were responsible for handling the C round, I would definitely do things differently. First of all, I would not delay the Series C round investment. I think investment funds are extremely important on doing a business; it is always better to prepare for enough funding rather than need it but cannot get the money. In addition, I would not bring the insider-led and the potential client DGSCP into the deal to give any v erbal perpetration before I made my decision.\r\nProvide a detailed discussion of the pros and cons of the two term sheets. Which is more favorable to Endeca? Evaluate the two term sheets both financially (in terms of value) and non-financially (other terms.) Which provides them with a higher opportunity of survival and success?\r\nFirst Term piece of paper\r\nPros\r\nCons\r\nMany investors who invested before, easier for the transition\r\nBarely dilutes Venrock\r\nOriginal harm equals to Liquidation Preference\r\nMade verbal commitment before\r\nPotential client DGSCP involved\r\n set about price per share, $0.985/share\r\nLess Capital\r\n diminished valuation\r\nSecond Term Sheet\r\nPros\r\nCons\r\n high Price per share, $1.25/share\r\nMore capital\r\n supply in new investors, new opportunity\r\n drop away Anger Series B investors and DGSCP in the C round\r\nMore complicated because of new investors\r\nAmpersand doesn’t have much experience in investing this industry\r\ nAccrued dividends and redemption rights\r\nAs the principal(prenominal) representative for Endeca’s shareholders, which deal should recommend to the get along? Why?\r\nAs the chief representative for Endeca’s shareholders, I think Papa should choose the outset term sheet. According to the analysis above, the first term sheet has more benefits over the jiffy term sheet and less cons compared to the routine term sheet. The merely thing I concern about the first term sheet is the capital is less than the second term sheet. However, in reality the capital that the second term sheet provided is still far from what Papa initially wanted for Series C. Most importantly, because Papa made the verbal commitment with the potential DGSCP client that he would choose the first term sheet, deliberate the future cooperation and business that Papa would probably do with DGSCP, I think it is a wise choice to choose the first one at this point.\r\n'