Mandatory Pre-Case Study Reading Note: You MUST read ALL Pre-Case Study readings and apply to Case Study answers! Venture Deals: Chapter: 11. Term Sheet Negotiations: A "Rich-vs.-King" Approach....

HOTMAIL CORPORAITONS
 What is the primary problem in the case?
Answer After going through the nook and corner of the case, there are various problems
faced by Mr. Sabeer Bhatia from time to time. But we may say that the primary problem
which the venture “ Hotmail Corporations” uses face is that “out of money position very
often” since the inception of the company. It normally happens when a company starts its
operations, it goes under different stages to finally get established in a particular position.
This may be of various reasons. Looking at the growth prospective of the company, the
venture capitalists show their interest in funding the company in different stages of
financing with the concept of post money valuation where value is accepted by both the
promoters and venture capitalist. We have seen the venture capital firms like Draper
Fisher Jurvetson (DFJ) and Menlo Ventures showing their interest and investing in the
company for a stake of 25% and 10% respectively. As the company was in expansion
mode in terms developing the new platform to render the best services in terms email and
advertisement in order to generate revenue. The company finds very difficult in fixing the
fund requirements and get funded in terms of venture capital in different rounds of
financing. We observe that the company has funded its requirements in four rounds of
stages from venture capitalists. The basic reason behind the “out of money concept”
from time to time is because of the difficulty in assessing the fund requirements for the
business development and get the funds to deploy in the business in a time bound
manner.
 What are the major factors affecting the primary problem?
Answer Following are the major factors that...