This case is about Netscape Initial Public Offering (IPO) in 1995. Netscape had a successful starting in the market mainly because of their strategy of “Give away today and make money tomorrow”, which let them capture 75% of the web browser market, making it the most popular browsing software. The successful strategy consists in gaining its large market share by initially giving away its product for free. Netscape had to create a new industry standard to succeed in the long term, besides make revenues by selling server software to companies that require marketing access to potential consumers, by selling its software packages and through providing servers on the world wide web, consulting, maintenance, and support services. The success of Netscape was reflected in the remarkable faster growth in its full year of revenues. However Netscape was in a risky competitive position. They were in a very changing market that demanded high investments in Research and Development in order to keep highly standards of innovation. Also new competitors with profitable strategies were entering within the market, which put Netscape pressured to keep as a leader of the market. Netscape had to go public in response to its growing capital needs in 1995. They needed to finance activities to maintain its leadership position in the market. Also they expected high grow in the future, and going public let them to gain visibility and creditability within the industry. The following tables shows the magnitude of its capital need over the next five years using a expecting grow of 42.6% | Capital Needs |
| 1996| 1997| 1998| 1999| 2000|
Net Gain / Loss| (8,226,047.14)| (5,124,832.44)| 2,183,531.08 | 16,723,082.47 | 43,331,845.59 |
Netscape also could use private equity to finance their capital needs. Which involves direct negotiations with various financial or nonfinancial institutions. In such a case, a company raises money from these various entities, which then...