By Harold Grousbeck, Alex Tauber
1998 | Case No. E52
This case chronicles the origin of InterMarket, a software tools company developing advertising tools for the emerging Internet advertising market. Two business school graduates get excited about the possibilities that the Internet offers and decide to form a company that develops software tools. They form a partnership with an engineering student, who will be primarily responsible for developing the product, and start developing the prototype. The case describes their search for funding, which is successful as they find a very well-respected investor to back them. As they get started, however, they have severe partnership problems with their engineering partner which need to be resolved quickly. The case then describes the early evolution of the company and their search for a second round of funding. They were unsuccessful in finding a VC investor, but did get a technology publisher to invest in the company. As the company continues, they have some serious organizational weaknesses, including a very weak Engineering department which is causing them to miss product deadlines and putting them behind some of their competitors. Nonetheless, they sign up some high-profile customers and feel optimistic because the market is growing quickly. They then seek a third round of funding and get an acquisition offer from a large Internet company. The company is split on whether or not to accept the offer, but they must resolve the question soon. Teaching Note available.
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