Case Teaching Package
A case teaching package, written by Bill Bygrave, is available for this case. It includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course.
Length
This case is
14 pages in length and its case teaching package is
8 pages.
Abstract
The Jon Hirschtick case is the first case in a two-case series. The second case is SolidWorks, which is the company that Hirschtick founded. The case series deals with raising two rounds of venture capital for a high-potential software company. The Jon Hirschtick case shows the important ingredients of a "classic" venture capital-backed startup: an "A" team, with an "A" idea, in an exciting high-tech industry. It enables students to examine the search for venture capital and the valuation of a seed-stage, high-tech business. Also it can be used to illustrate career paths both in high-tech entrepreneurship and venture capital.
This case is positioned in a new ventures course as a classic seed-stage venture capital deal. It is positioned to follow immediately after Neverfail Computing, which is funded at the seed stage first by the founders and then by angels, with venture capital not being invested until the early-growth stage. Hence, Neverfail is 4F-funding (Founders, Family, Friends, and Foolhardy) followed by venture capital. In contrast, Jon Hirschtick is a "classic" seed-stage deal: The founders work for no pay to develop proof of principle demonstration of the technology, to write a business plan, and to search for venture capital.
- Location of the company: Massachusetts
- Years spanned by the case: 1993 through 1994
- Industry segment: Personal computer software for 3-dimensional CAD
- Stage of the company: Pre-start-up and start-up
- Age of the entrepreneurs: 30s and 50s
Study Questions
- Why has this deal attracted venture capital?
- Can the founders optimize their personal financial returns and simultaneously ensure that SolidWorks has sufficient capital to optimize its chance of succeeding? What factors should the founders consider?
- How can the syndicate optimize its potential return? What factors should it consider?
- After you have answered questions #2 and #3, structure a deal that will serve the best interests of the founders, the company, and the venture capital firms.
Key Words
creating a high-tech software company, developing a prototype, positioning a new product, building a team, raising venture capital, valuation, negotiations, value added by venture capitalists, ownership, founders' stock, stock options
The downloadable file for this case is in Microsoft® Word 7.0 for Windows®.
If you do not have Microsoft Word, you can download the free Microsoft® Word Viewer 97 right here: For Windows 3.x For Windows 95
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