2016 | Case No. E451 | Length 26 pgs.
Skybox Imaging was hanging by a thread. The venture-backed company was founded with the goal to develop a constellation of imaging microsatellites to deliver high-resolution imagery of any spot on Earth multiple times per day. The company had raised $21 million from two top venture capital (VC) firms in Silicon Valley, and was in the midst of the Series C financing to raise close to $70 million to fund the company through the launch of its first two microsatellites. Unfortunately, the round had taken a turn for the worse and the funding fell through at the last minute, leaving the company in a very precarious situation. The board and management team were grappling with a decision regarding the company’s future, specifically whether it made sense for the company to close its doors and minimize the bleeding, or to make a last-ditch effort based on a $10 million bridge loan from inside investors.
Learning ObjectiveHelp students appreciate and evaluate the risks and opportunities with a capital-intensive startup. Prompt students to comprehend how venture capitalists evaluate investment opportunities and what kinds of conditions they may put on their investments, and how different rounds of funding come with different challenges. Encourage critical thinking about how startups should evaluate vendors.
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