Good Money After Bad
oodFor the exclusive use of Z. CAO
www.hbrreprints.org
HBR CASE STUDY AND COMMENTARY
S hould Harbinson recommend f urther i nvestment in Seven
Pea ks?
Good Money After
Bad?
Four commentators offer e xpert advice.
by John W. Mullins
•
Reprint R0703A
This document is authorized for use only by Zheng Cao in LSU Venture Capital - Spring, 2012 taught by MICHAEL
KIRBY from January 2012 to May 2012.
For the exclusive use of Z. CAO
Jack Brandon’s initial idea has not panned out, and the cash is nearly gone. But he’s got a new plan. Will you back him a second time?
HBR CASE STUDY
Good Money After
Bad?
COPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
by John W. Mullins
From a rocky perch overlooking the sparkling lights of San Francisco, Christian Harbinson gazed across the bay to the hills above Sausalito. “There’s nothing like a vigorous hike,” he thought, “to clear the mind before a crucial meeting.” It was a mild March evening, and the
35-year-old venture capitalist was reflecting on the recommendation he would have to make to his firm’s investment committee the next morning about Jack Brandon’s young company, Seven Peaks Technologies.
Seven Peaks had developed an innovative device for cauterizing blood vessels during electrosurgery, and although the feedback from surgeons had been excellent, sales had been slow.
The Palo Alto–based venture capital firm where
Harbinson worked, Scharfstein Weekes, had invested $600,000 in Seven Peaks from its newly raised second fund of $100 million. SW’s current investment strategy focused on early-stage medical technology companies, and Seven
Peaks was a typical investment for the firm, which liked to get in on promising ideas modestly and then follow with additional rounds of capital after technological and market milestones had been met. The $600,000 was nearly gone; Harbinson and his colleagues had to decide whether to put more into the struggling company. Seven Peaks was looking for
www.hbrreprints.org
HBR CASE STUDY AND COMMENTARY
S hould Harbinson recommend f urther i nvestment in Seven
Pea ks?
Good Money After
Bad?
Four commentators offer e xpert advice.
by John W. Mullins
•
Reprint R0703A
This document is authorized for use only by Zheng Cao in LSU Venture Capital - Spring, 2012 taught by MICHAEL
KIRBY from January 2012 to May 2012.
For the exclusive use of Z. CAO
Jack Brandon’s initial idea has not panned out, and the cash is nearly gone. But he’s got a new plan. Will you back him a second time?
HBR CASE STUDY
Good Money After
Bad?
COPYRIGHT © 2007 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
by John W. Mullins
From a rocky perch overlooking the sparkling lights of San Francisco, Christian Harbinson gazed across the bay to the hills above Sausalito. “There’s nothing like a vigorous hike,” he thought, “to clear the mind before a crucial meeting.” It was a mild March evening, and the
35-year-old venture capitalist was reflecting on the recommendation he would have to make to his firm’s investment committee the next morning about Jack Brandon’s young company, Seven Peaks Technologies.
Seven Peaks had developed an innovative device for cauterizing blood vessels during electrosurgery, and although the feedback from surgeons had been excellent, sales had been slow.
The Palo Alto–based venture capital firm where
Harbinson worked, Scharfstein Weekes, had invested $600,000 in Seven Peaks from its newly raised second fund of $100 million. SW’s current investment strategy focused on early-stage medical technology companies, and Seven
Peaks was a typical investment for the firm, which liked to get in on promising ideas modestly and then follow with additional rounds of capital after technological and market milestones had been met. The $600,000 was nearly gone; Harbinson and his colleagues had to decide whether to put more into the struggling company. Seven Peaks was looking for