Endeca Technologies Essay

Executive SummaryEndeca Technologies is a software companionship that found by Steve soda pop on September 4th 2001. In the case, the union is currently looking for a Series C routine accompaniment to reduce the expected pre-m onenessy valuation multiple fourth dimensions because of the NASDAQ had fallen. In the end, the fellowship got a rough pre-money valuation of $25M. At this time, there are deuce different full term winding-clothess that each of them contains some pros and cons putting in front end of dada to let him take away. Overall, pa should choose the initiative term opinion poll because the benefits in that term woodworking plane are more than the minute of arc term sheet, and at the same time it has less cons.Does Endeca look like a good pullment at this time?Overall, Endeca looks like a uncivilised cream for dressors to invest. Since Endeca is a applied science software company, this industry is very hawkish and intensive everyday there are risi ng firms emerge in this industry with new technologies and ideas. At the beginning, Endeca planed to make a Series C round funding in around November and Decemeber in 2000. However, because of the NASDAQ was falling, the CEO Papa realized that raising funding at that time was vey hard. Thus, Papa drawn-out the funds from Series B to an extra six months. Papas action gave many other firms to abide the chances to catch up and give up their technologies and management strategies. Thus after this six-months delay, Endeca asks to put in more effort to gain back its commercialise status. What are the motivations for BVP and Venrock? Ampersand?Bessemer adventure Partners and Venrock invested in the second round on Endeca. Because Papa had connections with Venrock, where he had served a summer internship while at HBS. Papa and Venrock built the good consanguinity at that time, thus Venrock is willing to invest in Endeca, which is his motivation to invest in the firm. Ampersand is a new possiblely company that will invest in Endeca in Series C. This is a very diversified company and so far they didnt invest in any technology company similar to Endecayet. First, because Ampersand never invested in any firm in this industry yet, as a diversified investing firm, they are willing to take the chance to try new thing to invest on Endeca. Secondly, Ampersand has a long-standing connection to Endecas top management team, which is also Ampersands motivation to invest in Endeca.How has the CEO handled the C round? Would you do anything different? The CEO Papa hasnt handled the Series C round well due to many different reasons. First, as mentioned out front, because at that time the NASDAQ was falling, in order to avoid the distressing enthronization situation and wished the market will get better again, Papa stretched the Series B coronation for an extra six months. However, this turned out to be a bad decision. The fact is that the market didnt improve later and th e company was having awkward to get the term sheet from investors. Secondly, even though fortunately Papa got cardinal term sheets in the end, what he did wrong was that he make a verbal commitment to the insider-led and a potential client DGSCP says that one offer is better than the other one.If in the end Papa choose the other offer, he might be risky on interruption his words in front of DGSCP and losing demarcation with them. If I were responsible for intervention the C round, I would definitely do things differently. First of all, I would non delay the Series C round investment. I call in 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 verbal commitment out front I made my decision.Provide a detailed discussion of the pros and cons of the two term sheets. Which is more favorable to Endeca? Evaluate the two term sheets twain financially (in terms of value) and non-financially (other terms.) Which provides them with a higher probability of survival and success?First Term SheetProsConsMany investors who invested before, easier for the transitionBarely dilutes Venrock pilot film Price equals to Liquidation PreferenceMade verbal commitment beforePotential client DGSCP involvedLower price per share, $0.985/share little CapitalLow valuationSecond Term SheetProsCons high Price per share, $1.25/shareMore capitalBring in new investors, new opportunityLose Anger Series B investors and DGSCP in the C roundMore complicated because of new investorsAmpersand doesnt have much experience in investing this industryAccrued dividends and salvation rightsAs the chief representative for Endecas shareholders, which deal should recommend to the placard? Why?As the chief representative for Endecas shareholders, I think Papa should choose the first term sheet. According to the analysis above, the first termsheet has more benefits over the second term sheet and less cons compared to the second term sheet. The only thing I absorb 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. about importantly, because Papa made the verbal commitment with the potential DGSCP client that he would choose the first term sheet, consider 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.