Neverfail Computing

Topics: Venture capital, Angel investor, Startup company Pages: 5 (1720 words) Published: February 25, 2011
Do you think that Tim Delaney possessed necessary characteristics to become a successful entrepreneur by February 1993?

Since his youth, Tim Delaney was a hard-working and determined person which continued to demonstrate during his path. Before starting University, he did labour work which steeled his determination to “being paid to think”. He showed a lot of flair and creativity during his studies and won a first prize for best business plan. His undergraduate in Entrepreneurship & Marketing empowered him with the technical knowledge required to start his own business. We should also underline his long term vision, demonstrated by him changing jobs to a lower paid one (from 9$/hour to 6$, a 33% cut) in order to understand the IT industry and gain sales skills. His tenure at Byteway showed Tim Delaney to be a go-getter, able to make things done fast and efficiently ($7m to $21m). While still at Byteway, he showed to be an inspiring leader, being able to convince his team to join him in a future start-up company. We must underline he was already planning for his own business by this time and it ended up being enough reason for Byteway to fire him and his team. Planning in such advance shows concern for “doing it right at first” which more impulsive entrepreneurs do sometimes lack. Responsible and independent, by working in Axionic he was able to gather a revenue of $15 million in his division. Moreover, in that firm he had the opportunity to create a considered range of clients network and get a deep knowledge of the market. When Axionic segregated in two, Tim Delaney could manage to start a new and different project with his previous colleagues. It is likely that this happened because they had a strong belief in his capacities and already knew his well-thought out past. Besides, in these two latter companies his position was always in sales. Being able to sell is incredibly important for entrepreneurs given the need for cash short-term, so they need to be skilled sellers to get their own business going and also to prevent it from sinking. He chose to work in the computer industry in his senior-year and ever since he has been specializing in it throughout his professional experience. There are certain characteristics common to successful entrepreneurs , some of them are: Believe in your business; Plan Everything; Manage Money wisely; Ask for the sale; It’s all about the Customer; Get to know your Customers; Build a top-notch business team; Become known as an expert (in your area); Get involved; Master the art of negotiation.* Given his path and professional experience we are to believe he possessed all these characteristics which he would use in Neverfail. In February of 1993, Tim Delaney became the CEO of Neverfail Computing. In our view, in this moment of his life and career he was ready to become a successful entrepreneur given all the skills, key-entrepreneur characteristics and industry knowledge he had accumulated.  

Why did Neverfail decide finally to raise money from external investors? Was it a good decision? How do you evaluate Neverfail’s capital raising strategy?

The financing strategy of Neverfail in its early stage can be described as 4F (founders, family, friends and foolhardy). It was founded using only $48.000, which were obtained from a loan from two employees. Through creative financing and employee usage of personal savings for living expenses, therefore having no personnel costs, the company kept doing business just with the cash flows from its projects. Neverfail was maintaining its liquidity also by leveraging industry relationship. In 1994 the related distributors generated the majority of the total revenues of $2.238.151. In a later stage, “contra funding” was replaced by quick payment discounts and lagging. This situation subsisted until the entry of George Lawrence, a business angel, in Neverfail´s equity, in September 1993. Neverfail valued his potential help, himself having succeeded...
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