Dr. Russell F. Henke -- Business Consultant
Case #6 -- Advising a Start Up
Over a period of three years, several tenured researchers at a prestigious university develop unique and powerful software technology under outside grants secured for such efforts. After creating several sample prototype applications with the software technology, the researchers become convinced that they possess the basis of a successful start-up company typical of the Silicon Valley. An incorporated shell company is established.
On their own, the researchers labor further to create a second generation refinement of the original software. Technical papers and newspaper articles are published and an initial business plan draft is assembled. Folks who could become the first dozen hires are identified, pending funding of the enterprise. The researchers shop their initial business plan among multiple venture capitalists, but the researchers meet with resistance or indifference for months and months. While sorely discouraged, the intrepid team keeps the faith that the technology still contains commercial promise. They contemplate bootstrap or private financing, but the cash requirements continue to appear daunting from all perspectives.
Leveraging both his business planning acumen and his past personal experience in raising over $20 million in venture and corporate equity investments, the consultant rapidly identifies a score of significant strategic and tactical deficiencies in the current business plan and company situation. Oral and written guidance is provided to address virtually all these deficiencies. Finally, the consultant suggests that the researchers also consider selling the technology outright to a large enterprise already entrenched in the field. Elapsed time from the consultant's first meeting with the researchers: slightly over two weeks! Prognosis: bullish!
