Case Name :      Elderline Communications

Authors :           Carl Hedberg, William D. Bygrave

Source:              Babson College

Case ID:             BAB110

Discipline :        Entrepreneurship

Case Length :    17 pages

Solution sample availability : YES

Plagiarism : NO (100% Original work)

This case was written for graduate and undergraduate courses in entrepreneurship. Elderline Communications was a voice-application technology enterprise founded by two former colleagues. After being bootstrapped from its inception, it was on the verge of a meltdown. It had reached a critical juncture. While the momentum had been encouraging, the need to conserve cash and raise money had become essential if the company was going to survive. Three months prior, in May of 2002, the team had closed a multi-investor seed round of just over $380,000. While it had been a relief to finally compensate employees who had up until then been working on faith, it was evident that things were going to get real tight again, and fast. The Elderline partners had discovered that venture capitalists, sobered by the dot-com bust and a steadily declining stock market, seemed to be favoring less risky opportunities that could offer-if not actual profits-at least established contracts, clients and revenue. In a move to cast a wider net, the team was in talks with a “finder”-a well-connected funding broker with venture investor contacts throughout the Northeast. What should they do? Should they hire this finder or seek alternative methods of tapping into the venture funding they required?