TAILIEUCHUNG - PORTABLE MBA IN FINANCE AND ACCOUNTING CHAPTER 14

PART THREE MAKING KEY STR ATEGIC DECISIONS. 14 GOING PUBLIC. Stephen M. Honig. SETTING THE STAGE. It is June 2000, and recent MIT graduate John Dough and his friend, business school graduate Mary Manager, decide to pursue a software idea that Dough has conceptualized. Dough believes that he can design a relational database that will more tightly store financial information and more quickly access that information than anything now on the market. | PART THREE MAKING KEY STRATEGIC DECISIONS 14 GOING PUBLIC Stephen M. Honig SETTING THE STAGE It is June 2000 and recent MIT graduate John Dough and his friend business school graduate Mary Manager decide to pursue a software idea that Dough has conceptualized. Dough believes that he can design a relational database that will more tightly store financial information and more quickly access that information than anything now on the market. Dough and Manager take their meager savings accounts and 20 000 of credit card advances and form Inc. a Delaware corporation. Dough sits down at his computer and begins to program Dough-Ware. Mary successfully approaches five business school acquaintances each invests 4 000 and each is issued 4 of the company s stock. By the spring of 2001 Dough has a working initial version of DoughWare available for testing at the sites of potential clients. The company is completely out of funds and is without the necessary liquidity to negotiate for the test sites install the software and work with prospective clients. Dough and Manager have been networking at venture capital forums and are able to induce five angel investors wealthy individuals with a history of investing in emerging technology companies to invest an aggregate of 250 000. By June 2001 each of Dough and Manager now owns 30 of their company each of the original five investors owns 3 the new angel investors have received a 25 common stock interest. With this new money and with modest interim payments from the first beta site or test customers the company begins installation and testing of its software. .

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