Babson Professor William Bygrave, Case Director
Dan D’Heilly, Case Writer
Arthur M. Blank Center for Entrepreneurship,
© Babson College, 2001.
The Jon Hirschtick case is the first case in a two-case series. The second case is SolidWorks, which is the company that Hirschtick founded. The case series deals with raising two rounds of venture capital for a high-potential software company. The Jon Hirschtick case shows the important ingredients of a "classic" venture capital-backed startup: an "A" team, with an "A" idea, in an exciting high-tech industry. It enables students to examine the search for venture capital and the valuation of a seed-stage, high-tech business. Also it can be used to illustrate career paths both in high-tech entrepreneurship and venture capital. This case is positioned in a new ventures course as a classic seed-stage venture capital deal. It is positioned to follow immediately after Neverfail, which is funded at the seed stage first by the founders and then by angels, with venture capital not being invested until the early-growth stage. Hence, Neverfail is 4F-funding (founders, family, friends, and foolhardy) followed by venture capital. In contrast, Jon Hirschtick is a "classic" seed-stage deal: The founders work for no pay to develop proof of principle demonstration of the technology, to write a business plan, and to search for venture capital.
Location of the company: Massachusetts.
Years spanned by the case: 1993 through 1994.
Industry segment: Personal computer software for 3–dimensional CAD.
Stage of the company: Pre-start-up and start-up.
Age of the entrepreneur(s): 30s & 50s.
Key Words: Creating a high-tech software company, developing a prototype, positioning a new product, building a team, raising venture capital, valuation, negotiations, value added by venture capitalists, ownership, founders’ stock, and stock options.
There is a 31-minute DVD available for this case. Two principals, Jon Hirschtick and the lead venture capitalist, Axel Bichara, discuss the case with a class of Babson MBA students. (The same video is listed for the SolidWorks case.)
A 7-page case teaching package, written by Prof. Bill Bygrave is available for this case. The teaching package includes strategies for case presentation, key concepts, updates, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into a course.