New Opportunities For Young Software Companies

1527 WordsApr 15, 20157 Pages
Introduction: When Netscape was founded, the Internet market was facing a dynamic evolution, creating new opportunities for young software companies like Netscape to grow rapidly. Netscape took advantage of these conditions, becoming the first to focus on one-web browsers. There was little competition in this space at the time. They became the market leader, commanding strong customer loyalty and high brand recognition. Netscape introduced a competitive line of products, which were innovative and user-friendly. The products they offered enabled the customers to “surf” the web and publish information. Netscape served the market by providing services for companies, E-commerce applications, and personal browsers for retail customers.…show more content…
In the case of Netscape, though they are the industry leader, they must still create a strategy that can foster future innovation. Future Financing: Going public is one way of supplying new capital, but there are alternatives. The source of capital depends on a firm 's characteristics, the nature of information between investors and company, and the degree of uncertainty in future returns. Therefore, possibilities for future financing include private equity capital, initial public offer, and bank loans. Private equity transaction entails various direct negotiations with institutions that raise money and then own a portion of the company in privately held shares of stock or other securities. At the time of the IPO, Clark, Kleiner Perkins, and a group of media companies owned the largest stakes of Netscape 's equity at 24%, 11%, and 11%, respectively. Netscape could also take on more debt in order to finance future projects. This option would not be ideal though, because Netscape is looking to expand over time, and taking on more debt would expose them to future bankruptcy risk. Netscapes third option is going public, which will allow them to avoid the threat of a bank taking over their businesses. Although, dividends are welcomed by investors they are not mandatory the same way
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