Originally Published MX November/December 2005
BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT
The Entrepreneur's Dream|
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Company A was the second company that Bill Doright, MD, founded. After deciding to start the new company, the experienced entrepreneur enlisted the services of a reputable lawyer to incorporate the enterprise.
Bill then recruited a talented and proven engineer to help design the company's first product. The engineer was allocated one-third the number of shares that Bill received, and the shares of both were to vest over a four-year period. The prior art was extensively reviewed by an expert; then, patents were filed.
Prior to meeting with four venture capital firms, Company A made prototypes of its inaugural product and recruited a stellar medical advisory board. Within two months, a lead investor committed to funding the company and a coinvestor was selected to round out the $4-million series A financing.
The company developed prototypes that were tested in animals during the next 14 months. The founder decided at the beginning that he did not want to run the company, so the board of directors hired a well-qualified CEO.
Company A developed and patented additional products, and then raised a $12-million series B financing at a price per share 75% above the price of the series A. The first product developed entered the market 30 months after the company received its initial financing, and sales increased rapidly following launch.
Shortly after a $7-million series C financing, a corporate acquirer bought Bill Doright's company at a per-share price 10 times that of the series A shares.
Bill was pleased with the way Company A turned out. And the energized doctor was incubating a new idea—perhaps a third company?
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