The following sample essay on “Case Analysis Ockham Technology”: analysis of distribution, fund, team and future of Ockham Technology.
Equity distribution Divided only by capital amount No sales & Non-compete term Made sales calls to “non-compete” clients Differentiate their products/services First big sale to IBM -?a million-dollar contract Joining ATSC to add credibility Company name -? legal issue Changed the company name from “SouthPaw” to “Champ” Complete No investors The first big sale convinced investor with foreseeable profits Jims connections (Yates, Gorgon, Brewer) introduced investors Complete No product unreliable development team Look for another deep.
Team – KNIT, Thoughtful, or Hotshot Coders Build a self-owned development team -? Anderson, Taylor, or others In-process Raise money Build a board Bobby Crews – $1 Mom, 50% equity Monarch/Cordovan – $1. Mm, 33. 33% equity Nor – $mm, 18% annual return before anyone else got anything In-process Tension with Mike Jim – Split up company responsibilities Mike – Keep control, be partner In-process b. Assessment i. Jim proved the products value and feasibility through his first sale to IBM ii.
His success in the first sales helped him win more chance of further capital iii.
He founded a team with diverse and complement background, which has contributed to forming an idea, developing a business plan, managing the product, and achieving the first successful sale. Iv. He fully used his connections to reach out to more talents and resources v. Though facing tons of problems, Jim and his team has overcome many of them and worked hard to solve the rest. They also have strong work ethic by obeying the non- compete term with TAG.
2. How will the current fund-raising efforts affect the formation of Chasm’s board of directors? A.
Fund-raising and board orientation Fund-raising Board Composition pros Cons Bobby Crews 50% equity $ 1 Mom Jim, Mike, and Bobby Abundant money Bobby knows little about this business Bobby want half of equity Monarch/Cordovan 33% equity $1. Mm Jim, Mike, 1 or 2 PVC(s) from M/C, maybe 1 outsider A fast-growing PVC Bring more resources/value in the future < $2mm Relatively high equity requirement Noro $4mm 18% annual return before anyone getting anything Jim, Mike, 2 VCs from Noro, 1 outsider Biggest VC in the Atlanta area Rich resources and experience Over-influence from one VC -? Noro
Investing in return rather than equity may lead to myopia on short-term profits Use two or more Vs. Jim, Mike, PVC from dif. Companies, 1 outsider Diverse board composition More capital Vs. may take over too much equity Less control 3. If you were Jim, how would you handle the increasing tension between y and Mike? A. Pros and Cons Jim Split up responsibilities Mike Involve in all decisions Be partners Pros More resources Grow faster Long-term profits More control More profits in a short term Sacrifice short-term profits Limited resources and development
Less competitive b. Solution i. Negotiate with Mike ii. Identify common goals 1. Development: Long-term vs. Short-term 2. Long-term profits vs. Temporary more control iii. Define an acceptable range of decision-making for Mike iv. Emphasize Mike’s importance to the company v. Explain why/how dividing the company into pieces will benefit more to try company and themselves vi. Convince Mike to agree on splitting up the company’s responsibilities but secure his “power” and importance in this company 4. Should Champ outsource its system-development efforts?