Good Money After Bad Article

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HBR CASE STUDY AND COMMENTARY

S i9000 hould Harbinson

recommend farrenheit urther

my spouse and i nvestment in Seven

Pea ks?

Good Money After

Awful?

Four bloggers offer

elizabeth xpert advice.

by David W. Mullins

•

Reprint R0703A

This kind of document can be authorized for proper use only simply by Zheng Cao in LSU Venture Capital -- Spring, 2012 taught by MICHAEL KIRBY from January 2012 to May 2012.

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Jack Brandon's initial thought has not panned out, as well as the cash is nearly gone. Nevertheless he's got a new strategy. Will you back him the second time?

HBR CASE STUDY

Cash After

Awful?

COPYRIGHT В© 2007 HARVARD BUSINESS UNIVERSITY PUBLISHING ORGANIZATION. ALL PRIVILEGES RESERVED.

simply by John Watts. Mullins

Coming from a rocky perch overlooking the dazzling

lights of San Francisco, Christian Harbinson

gazed across the these types of to the hills above Sausalito. " Irritating like a vigorous hike, ” he thought, " to clear the mind ahead of a crucial

getting together with. ” It was a mild Mar evening, plus the

35-year-old enterprise capitalist was reflecting upon

the advice he would have to make to

his п¬Ѓrm's investment panel the next

morning hours about Jack Brandon's youthful company, Eight Peaks Technologies. Seven Highs had designed an innovative unit for cauterizing blood vessels during electrosurgery, and although the opinions from doctors had been exceptional, sales had been slow. The Palo Alto–based venture capital firm where

Harbinson worked, Scharfstein Weekes, had invested $600, 000 in Seven Highs from its recently raised second fund of $100 million. SW's current investment approach focused on early-stage medical technology companies, and Seven

Highs was a typical investment intended for the п¬Ѓrm,

which liked to join on appealing ideas slightly and then comply with with additional rounds of capital after technological and market breakthrough had been fulfilled. The $600, 000 was nearly gone; Harbinson fantastic colleagues were required to decide whether to put more into the unable company.

Several Peaks wanted another

$400, 000 to produce a second merchandise based on

it is proprietary technology, which empowered surgical instruments to do their very own work devoid of sticking to tissue—a frustrating trouble for most electrosurgeons. Brandon continue to believed in his

technology and in his capacity to commercialize

that. Harbinson was impressed equally with Brandon

and with the technology's potential, however, many

of the mature partners were not so sure. " Would

we simply be throwing good money after awful? ”

SW's cofounder Later on Scharfstein acquired asked when ever

Harbinson told the purchase committee of

HBR's circumstances, which are п¬Ѓctional, present common managerial dilemmas and offer cement solutions by experts.

harvard business assessment • 03 2007

This kind of document is definitely authorized for use only simply by Zheng Cao in LSU Venture Capital - Spring, 2012 taught simply by MICHAEL KIRBY from January 2012 to May 2012.

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G ood Money After Bad? •• •H BR C A SE H T UDY

The Release

compare paperwork and speak to one another about

new improvements. To make sure he was on

your path, Brandon got given his prototype to a few surgeons he knew to learn what they thought of it. " Too large, ” one of them

said. " It will eventually block my own view with the surgical site. ”

Another told him, " I prefer how it works and

saves me period, but it's a lot of difficulty to take that

apart after each process in order to sterilize

it. ”

Brandon remodeled his system based on the

feedback, after several months of diligent

work, he gained FDA acceptance. The redesign was

smaller sized and slimmer for better access to the surgical web page and did not require any kind of disassembly for sterilization. It had been time to see how the market might react.

Harbinson was equally impressed by Brandon's showmanship. The Seven Highs cauterizer made its first appearance at a surgical trade show in Atlanta. It absolutely was the look at the fair. Brandon experienced

bought several п¬Ѓsh by a local industry, and this individual

did side-by-side operations...



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