Serious Materials Corporation

In August 2007, Kevin Surace, CEO of Serious Materials Corporation (SMC), was about to fly back to San Francisco from Rome, when he received a call from Scott Sandell. Sandell, a partner at the venture capital firm New Enterprise Associates (NEA), had recently been in discussions to invest $25 million (out of a $50 million round) in Serious Materials. However, upon completing some last minute market research on SMC’s future “clean technology” product, EcoRock drywall, Sandell said, “I’m sorry about this, but we are not going to move forward on the deal.” Surace was less than pleased. He noted, “My impression had been that NEA was excited about the company and almost ready to sign a term sheet. It had taken us longer than we anticipated to reach this point in the fundraising process and now the deal was in trouble.” Surace tried to convince Sandell that they had misunderstood the market potential, but Sandell passed anyway. As he took his seat on the plane, Surace wondered how to get the company’s financing back on track.