Dr. Russell F. Henke -- Business Consultant
Case #21 -- Raising Series B
In late summer, Henke Associates was contacted by an early-stage company located in the USA Midwest. Only a few years old, the company had been supported by a small Series A angel round of capital plus early revenues from the recent introduction of its first software product. At this juncture, a fresh infusion of Series B capital was envisioned to build out the young company's sales and marketing teams, and to launch development of follow-on software modules.
The company's CEO was referred to Henke Associates by a mutual colleague who knew of the venture capital connections of principal Dr. Russ Henke. Within a week of initial contact, a Consulting Agreement was signed with the Midwest company and work begun.
The first orders of business were to develop a whole new Business Plan aimed at the likely Series B investment community, and from the full Business Plan to create both a fresh Executive Summary and a condensed Investment Brief. The Consultant and the company's executives collaborated to create these documents within a few elapsed weeks (hard copy and electronic forms), leveraging the Henke Associates' exclusive Planning Tool Kit tailored to the specific needs of the young enterprise and its target markets.
Simultaneously, the Consultant began to organize a campaign to approach selected Venture Capital entities, angels and certain corporate clients who were judged most likely to value an early stage company in its particular market niche. Potential target investors identified by the Consultant were headquartered across the USA, including specific entities in the San Francisco Bay Area, Southern California, Oregon, Washington, Utah, Colorado, Minnesota, Wisconsin, Illinois, Indiana, Ohio, New York and Massachusetts, just to name a few.
Over a period of two months, a Series B investment campaign was carried out using a combination of personal visits, emails, telephone calls and Internet-enabled conference calls & product demos. Meanwhile, company principals were pursuing additional customers and product developments.
It soon became clear that the initial Series B valuation anticipated by the company executives was slightly higher than the investment community was willing to consider. Accordingly, the Business Plan was suitably adjusted and the Consultant recommenced the investor solicitations.
This time around, fully four separate VC's (one each in Vail, Chicago, New York City and Boston) and three corporate entities (one each in CA, GA and MA) provided investment commitments by the end of the year. In addition, two of the three corporate clients offered to acquire immediately the early-stage company outright, but full acquisition at this stage was eschewed by the CEO of the fledgling company.
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