BabySupplies: Entrepreneur-Investor Conflict (A)
By
Ener, Hakan
More than two years ago, Liz, the founder of BabySupplies, received an investment from FineWorks Venture Capital. Now, with BabySupplies' revenues below forecast and the business yet to achieve breakeven, she is facing a difficult request. The FineWorks Venture Capital fund, in light of BabySupplies' lagging revenues, wants to exercise their contractual right to obtain more shares in BabySupplies at no cost. This right is based on the shareholders' agreement they signed at the time of the initial investment. As the chair of the Board, Liz has to decide how to respond.
Collection: IESE (España)
Ref: E-179-E
Format: PDF
Number of pages: 6
Publication Date: May 23, 2016
Language: English, Spanish
What material is included in this case:
Description
More than two years ago, Liz, the founder of BabySupplies, received an investment from FineWorks Venture Capital. Now, with BabySupplies' revenues below forecast and the business yet to achieve breakeven, she is facing a difficult request. The FineWorks Venture Capital fund, in light of BabySupplies' lagging revenues, wants to exercise their contractual right to obtain more shares in BabySupplies at no cost. This right is based on the shareholders' agreement they signed at the time of the initial investment. As the chair of the Board, Liz has to decide how to respond.
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Year: 2015
Geographic Setting: Suiza
Learning Objective
Illustrating how to deal with conflict between an entrepreneur and an investor on the Board of a founder-managed venture.
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