Walnut Venture Asociates Deal Terms

5078 Words Dec 14th, 2014 21 Pages
Harvard Business School

9-899-097
Rev. November 19, 1998

Walnut Venture Associates (D): RBS Deal Terms
It was Friday, June 5, 1998, and Bob O’Connor was headed home for the weekend. He knew it would be a busy one, for he had many decisions to make. He had been trying to raise capital for his Company – the RBS Group, a software firm – for almost a year. He felt like he was finally nearing the end of this process, but now more issues had arisen. First, his prospective investors wanted to increase the amount of their investment. While he would be happy to have the extra money, he felt that the valuation on RBS was already lower than he had hoped, and he was reluctant to take more money at this price. Second, he had received a draft
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Given this level of support from his group, Wagner felt it was up to Walnut to try to help O’Connor raise the remaining funds:
Lecturer Michael J. Roberts prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 1998 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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Walnut Venture Associates (D): RBS Deal Terms

We wanted to do this deal, and that meant doing more than sitting on our hands waiting for Bob to pull together the rest of the money. We held ourselves up as “value-added investors” and this was our opportunity to show that we meant it. Wagner and other “Walnuters” contacted several New England area VC firms who they believed might have an appetite for an investment in RBS. Based on the appeal of RBS’s business and the Walnut recommendation, 3 or 4 firms initiated serious due diligence efforts. But, these efforts came to naught. Wagner explained: Each of the venture firms decided that the market was small

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