Walnut Case

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Walnut Venture Associates RBS Group is a complete accounting application solution provider targeting its products to software companies. Their product, SOFTRAX, provides software companies with a full-package of solutions spanning in financials, sales & marketing, customer support and software operations. Robert O’Connor, RBS’s founder and CEO was seeking a $2 million second round venture capital financing to support their regional sales offices growth and recruit personnel in sales, implementation & customer support. Though RBS is still a young company, it indicates to position itself in a unique niche market within a solid market. They have seasoned management team and have allied with several key clients and partnerships.…show more content…
Although early adoption of two regional offices in late 1997 contributed to seven new customers and $600,000 in revenue, further sales team expansion doesn’t necessarily to lead a great incremental growth. In addition, four additional offices are located in New York, Chicago, the Southeast and Mid-Atlantic States, which don’t cluster the pockets of concentration in the software market. The second issue is related to challenges along with modified business model. RBS originally devoted their time and spirit into business advisory and updating existing platforms and currently, means to expand their value-add service in the future. Though their alternative product offering value-add Web Order to SOFTWAX’s web application has been successful, other future value-added products may not meet the demand from customers. This aggressive strategy in value-add service area along with geographical expansion into an international market increases future risk exposure for persistent growth. Last issue is related to the fierce competition in the industry. Although RBS leads a unique business model in the market, it operates in a highly congested replacement market for internal systems. Some individual commercial product provider in financials, sales & marketing, and customer support can expand their business line upwards

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