EE204: Business Management for
Electrical Engineers and Computer Scientists

Nantero

Read

1. Read: How Venture Capitalists Evaluate Potential Venture Opportunities
2. Review: Alternate Sources of Financing
3. Read: Nantero

Case Summary

This case describes a decision confronting the founder of Nantero, a company developing a new semiconductor technology. The company needs to raise additional venture capital. Potential investors have competing visions for the company, and its business model. Some investors want the company to license its technology to semiconductor companies. Others want the company to become a "fabless" semiconductor company producing and selling its own products. The question for the team at Nantero is: what model makes sense and which investor offers the most attractive terms?

Discussion Questions

1. What are the pros and cons of the three business models for Nantero and which would you recommend to the CEO Greg Schmergel
   1. Integrated Device Manufacturer (IDM was dismissed in the case but is there any variant)
   2. IP licensing
   3. Fabless
2. As a venture capitalist, are you going to participate in this round of funding? What was your decision process
3. Compare the term sheets from Saturn Ventures and Zeus Capital. As CEO of Nantero, would you accept one or keep looking? If you accept, which one? Are there any terms you'd negotiate?
4. How much capital do you see Nantero needing before reaching viability. Where might additional capital come from?
5. What are the possible liquidity strategies for Nantero shareholders. Which is best from the company, employee, and investor perspective?

Nantero