Spotfire : Managing a Multinational Start-Up

SUBJECT AREAS: International Entrepreneurial Finance, Venture Capital, Valuation, Deal Structuring, EntrepreneurshipCASE SETTING: June, 1998, Swedish software company This case describes Spotfire, a two-year old software company specializing in the visualization of complex datasets. Spotfire was started in Sweden in April 1996 by a computer scientist turned entrepreneur. The lead investor in the company's latest round of funding was Atlas, a transatlantic venture capital firm. At the time of the case (June 1998) Spotfire is in the process of raising additional capital and the entrepreneur needs to assess the value of his company and the amount of capital that he should raise. In addition, Spotfire faces a number of important management challenges. First, the company needs to assess its marketing and sales strategy. Second, with the company's headquarters firmly installed in Boston after moving from Sweden, Spotfire needs to decide if and for how long to keep software development in Sweden. Both decisions will have an impact on the amount of capital that Spotfire needs to raise.A primary teaching purpose of the case is to assess funding needs and valuation of a young, fast-growing firm. Furthermore, the case can be used to teach about deal structures typically used by venture capitalists and about the reality of interaction between venture capitalists and entrepreneurs. Specifically, the case shows how venture capitalists add value beyond their invested capital but the case also shows how venture capitalists seek to protect their downside. An interesting feature of Spotfire is that it allows for a comparative discussion of the funding environment for start-ups in Sweden and the U.S.The case has been used in MBA and executive education programs at Harvard Business School, MIT and other leading business schools