Raising Capital in Todays Economy Charles F' Kane, President

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Raising Capital in Todays Economy Charles
F. Kane, President COO Corechange, Inc.
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Massachusetts Software Internet Council
Date January 25, 2002
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Points of Discussion

• Corechange Overview
• Venture Capital Selection Criteria
• Corechange Case Study
• Lessons Learned
• The New Economy

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Corechange, Inc. Overview

• Founded 1996
• Headquarters in Boston
• 130 employees worldwide
• RD in Boston and Stockholm
• Worldwide sales and service presence

Headquarters Corechange Sales Office Corechange
Distributor
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Venture Capital Selection Criteria

• Strategic vs. Financial
• Round of financing (early stage vs. late stage)
• Market focus
• Lead vs. Follower
• Financing size
• Board participation
• Aggressive growth vs. value

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Case Study Corechange

• Private round followed attempted IPO
• 36 M raised in Series C
• Investor Mix
• -strategic
• -financial
• -geographic
• 85 new money
• 45 meetings

• Key Drivers
• -Business Plan
• -Entrepreneurial/operational mix
• -Valuation concession
• -product, product, product
• -Key indirect channels
• -Global presence
• -Blue Chip customers

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Lessons Learned

• Need banking assistance
• Qualify deal interest based on attendees
• Provide diligence assistance only if interest is
  genuine
• Thorough understanding of competitors
• Be pro-active in providing customer/relationship
  reference calls
• Update the State of the Business throughout the
  process
• Be resilient!

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The New Economy

• Bar raised for small companies
• Sales cycle requires financial diligence
• up-front
• Strategic investments sharply curtailed
• Talent availability
• Liquidity events based on fundamentals
• Marathon, not sprintspend accordingly