HBR CASE STUDY

Cash After Awful?

Jack Brandon's initial idea has not panned out, and the cash is virtually gone. But he's received a new prepare. Will you again him an additional time?

simply by John Watts. Mullins

F

Daniel Vasconcellos

overlooking the sparkling signals of Bay area, Christian Harbinson gazed across the bay towards the hills above Sausalito. " There's nothing such as a vigorous rise, ” this individual thought, " to clear your head before an essential meeting. ” It was a gentle March night time, and the 35-year-old venture capitalist was reflecting on the advice he would need to make to his firm's investment committee the next morning about Plug Brandon's small company, Eight Peaks Solutions. Seven Peaks had developed an innovative unit for cauterizing blood vessels during electrosurgery, and although the reviews from surgeons had been superb, sales was slow. The Palo Alto–based venture capital firm where Harbinson worked, Scharfstein Weekes, got invested $600, 000 in Seven Peaks from its recently raised second fund of $100 mil. SW's current investment approach focused on early-stage medical technology companies, and Seven Peaks was a normal investment to get the firm, which enjoyed to get in on appealing ideas modestly and RANGE OF MOTION A ROCKY PERCH

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March 3 years ago

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HBR CASE STUDY

Good Money Following Bad?

then follow with additional times of capital after technological and industry milestones was met. The $600, 500 was practically gone; Harbinson and his acquaintances had to decide whether to set more in to the struggling company. Seven Peaks was looking for one more $400, 1000 to develop the second product depending on its proprietary technology, which in turn enabled medical instruments to do their work without sticking with

don got decided to take the leap trying to commercialize that on his own. He had used almost $65, 500 of his savings to make a hard prototype of any cauterization system. He decided to go with cauterization because the alloy's nonstick quality will make a real big difference to the success of the treatment. Prototype at your fingertips, Brandon contacted investors inside the medical gadgets arena to raise the capital required to make his device

The Launch

Brandon had certainly done his homework. Because Harbinson recognized from encounter, word of mouth will certainly make or break a new product in the industry; doctors in particular liked to compare notes and talk to one another about new developments. To make certain he was in the right direction, Brandon had given his prototype to a couple of surgeons he knew to learn what they thought of it. " Too large, ” one of them said. " It can block my view from the surgical web page. ” Another told him, " I like how functions and will save you me time, but 2 weeks . lot of difficulty to take it apart after each procedure in order to sterilize it. ” Brandon redesigned his gadget based on the feedback, after several months of diligent function, he received FDA approval. The redesign was smaller sized and leaner for better access to the surgical internet site and did not require any kind of disassembly to get sterilization. It was time to see how the market would react. Harbinson was evenly impressed by Brandon's showmanship. The Seven Highs cauterizer produced its debut at a surgical transact show in Atlanta. It absolutely was the look at the fair. Brandon acquired bought a lot of fish from a local industry, and he did side-by-side operations about them with his gadget and with conventional tools to demonstrate how a former can cauterize bloodstream in less than 50 percent the time. Everyone came to appearance, if only to determine what was causing the smell of cooking fish. A few surgeons who happened to run their own treatment centers ordered the product on the spot, although some asked for girl calls. Two surgicalproducts suppliers agreed to take on the cauterizer and offer this to their customers. Within a month, a couple of leading surgeons had become so thrilled by their effectiveness that they agreed...

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