NONE: re: ONLINE-ADS>>1:1 marketing and PowerAgent
re: ONLINE-ADS>>1:1 marketing and PowerAgent
Jae Kim (jykim_at_redshift.com)
Wed, 17 Sep 1997 00:21:38 -0700
I recently had the pleasure of hearing David Carlick from PowerAgent
speak during the recent Internet Outlook conference held in San
Francisco. It seems the conference was another one of those "network
with the VCs and bankers" meetings so it makes sense he was their
expousing the virtues of PowerAgent during his lunchtime sermon.
I gather from the posts many of you already know who they are and what
they do, I just wanted to share one key point Mr. Carlick made that
addresses Mark Dolley's earlier question about the "end of venture
capital Field of Dreams" funding activity.
Carlick noted the PowerAgents financial straights was partly their own
doing. A combination of development cost over-runs, rapid staff
expansion, and a seriously divided board over the company's future
direction, made charting through the rough waters a difficult
proposition. But that was only part of the problem.
What hurt the company the most was its sky-high self-valuation as it was
seeking its latest round of capital. While he did not say what that
was, I recently read an article quoting a $200 mil. figure. Put in
perspective, PointCast was looking at a $450 valuation when Rupert
Murdoch was rumored to be interested in buying them. What makes matters
worse for them now, in hindsight, was that at the time the world was
their oyster and everyone wanted to give them money--but not at that
valuation. he mentioned the lofty valuation stemmed from the founders
of the company wishing to prevent serious dilution of their equity.
Now i guess one can infer a couple of points from this. One, sure $16
mil. is great to start off with, but don't sell so much of your equity
in the company up front as to make future rounds difficult to complete
on terms you can be happy with.
Two, in untested waters perhaps modeling yourself like a biotech firm
(an industry notorious for multiple funding rounds) would be the best
tack to take in planning for a company's future capital needs.
By the way, he also mentioned that EDI, one of its principal backers, is
still interested in funding the company and if they do others will more
than likely follow. I havent kept up with PowerAgent since so I dont
know what has transpired since 9/9.
Jae Kim <jykim_at_redshift.com>
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