Peter Richterich

Babson Professor William Bygrave, Case Director

Arthur M. Blank Center for Entrepreneurship

© Babson College, 2000.

Abstract

An 18-month-old biotech software development company seeks seed money to develop DNA sequencing software. The entrepreneur is a scientist/software engineer who is convinced that the Human Genome Project, which started in 1990 as a $3 billion effort coordinated by the U.S. Department of Energy and the National Institute of Health to identify and categorize the tens of thousands of human genes, will result in a major demand for his product. His company, however, has great difficulty convincing potential investors of the company's potential due in part to the technical detail of his work as well as his sometimes overly aggressive personality. Finally, Peter has a promising meeting with an early stage venture capital company, headed by a person familiar with not only the highly specialized science of the Genome Project but also the enormous financial possibilities. After the meeting and while the venture capital company considers an investment, Peter reflects on what is the proper valuation for the company considering the future possibilities.

Location of the company: Dedham, Massachusetts

Years spanned by the case: 1998-1999

Industry segments: Biotechnology, software

Stage of the company: Start-up

Age of the entrepreneurs: Mid 30's

Key Words: Entrepreneurship, biotechnology, software, venture capital, valuation DVD There is no DVD available for this case.

Teaching Notes

A six page case teaching package, written by William Bygrave, is available for this case. The teaching package includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into a course.