Essay on Endeca Case

11079 Words Dec 2nd, 2014 45 Pages
9-802-141
REV: MAY 7, 2003

FELDA HARDYMON JOSH LERNER ANN LEAMON

Endeca Technologies (A)
On September 4, 2001, Steve Papa, CEO and founder of Endeca Technologies, could hear a construction worker nailing a “Commercial Real Estate Available” sign to a building across the street from his Cambridge, MA office. This had become routine, as hundreds of early stage technology companies failed to raise additional growth capital. The words of his Vice President of Marketing, Steve Sayre, warred with the sound of the construction. “I know the board is actively working on the C round,” Sayre said. “We’d better get this funding closed; I don’t think the NASDAQ is going to hold up.” Papa knew that his CFO shared Sayre’s concerns. To an even
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This document is authorized for use only by Jos?? mota in Private Equity 2013 taught by Hugo Gon?alves Pereira from April 2013 to October 2013.

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802-141 Endeca Technologies (A)

and he knew his management team was strong enough to keep the firm on track. He had started looking for $10 million in Series C funding in March 2001, and had reduced the pre-money several times from $90 million to $60 million to, finally, $25 million. [For context, Akamai, a publicly traded technology company, had seen its market capitalization fall from $30 billion at the time of Endeca’s Series B round, to $300 million at the time of Endeca’s Series C, a decline of 99%.] It had been a depressing and exhausting battle even to get a term sheet. Papa looked around the room at the other board members and observers: Hardy Smith from BVP; Steve Walske, former CEO of Parametric Technologies; Jim Baum, Endeca’s president and COO, also from Parametric Technologies; and Mike Tyrrell, a general partner at Venrock (see Exhibit 3 for ownership and investment). Papa knew that BVP and Venrock would contribute $5 million each in the insider deal. BVP had indicated its willingness to participate at a similar level in the…

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