Apex Investment Partners (A): April 1995
AccessLine Technologies is a telecommunication company is seeking $16 million in Round B financing. Apex Investment Partners is a venture capital firm leading this financing round.
Using a memorandum format, please address the questions below. Please attach your spreadsheet analysis, including capitalization tables and waterfall diagrams. Also, please ignore the warrants in the Series A term sheet.
a) What is Accessline’s competitive position in the market place?
b) Is AccessLine an attractive investment opportunity? Why or why not? What are the key risks associated with the investment?
c) Do you think Accessline’s exit value would be maximized in a merger/asset sale or IPO?
d) How has AccessLine financed itself to date? Why have they chosen this strategy? Who are the Series A investors? What have been the implications of this financing strategy for the firm? Why is Dan Kranzler now considering raising funds from Apex Investment Partners and not the Series A investors?
e) How attractive are the terms that AccessLine has proposed to Apex for the Series B financing? Does the deal structure adequately address the risks of the investment? What issues, if any should concern Apex?
f) Prepare “water-fall” diagrams for both merger/asset sale and IPO scenarios for the proposed term sheet. Please ignore the warrants in the Series A term sheet. How does it compare to the other term sheets that we’ve examined?