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E140A
- Session 13
Sources of Venture Capital
Summary
This case examines the evolution of the critical relationship between entrepreneurial teams and their venture capitalists. It also allows for discussion of the pros/cons of raising funds from traditional venture capital firms versus potential corporate partners and customers.
Guest
Required Reading (Policy
on Required Readings.)
- Case: Juniper (Purchase online). Note, please ignore any financials beyond April, 1997 in the exhibits.
- Watch the following video clips:
- Scott Kriens (CEO of Juniper) video clip collection on the Stanford Educators Corner (optional)
Study Questions (Policy
on Study Questions.)
- What does our traditional V-I-E analysis from Collins/Lazier indicate for Juniper? Why do you think it became such an attractive investment for world-class investors per Sahlman's criteria?
- Evaluate Sinhu's initial fundraising strategy for Juniper. What was his criteria for selecting VC partners? What did he expect of his VCs? How did this set of criteria and expected roles change between the first and second rounds of financing? In general, consider and list several pros and cons of raising traditional venture capital.
- What are the pros/cons of raising capital from potential corporate partners and customers? Attempt some research into the funding histories of other celebrated startups (please avoid finding out what Juniper did) and share some examples of success.
- Should the board accept Scott's recommendation to pursue corporate investors? What are some potential challenges of structuring (implementing) such a deal? For example, should these new investors get a board seat?
Assignment
After hearing the CEO's presentation at the Juniper board meeting in April of 1997 regarding the third round of investment, should the board of directors (accept/reject ... choose only one) his recommendation to aggressively pursue funding from corporate partners and customers? Why? (Submit your reply under the session assignment topic in the MFP Forum.)
Note: All teams submit one entry. No individual postings.