Michael Ridpath: Final Venture

No matter how many presentations I made, the board room didn't get any less intimidating. It was where all the important decisions in the life of Revere Partners were taken. Soft lighting reflected off cream walls with abstract sunsets. One set of windows overlooked Boston Harbor to the airport, the other the great canyon that was Franklin Street, with the colossus of the Bank of Boston building guarding one wall. Looking thoughtfully over Gil's shoulder, as if weighing the pros and cons of the discussion round the table, was a bust of Paul Revere himself. Silversmith, patriot, energetic horseman and finally wealthy entrepreneur, he mocked the computer geeks and disgruntled middle-managers who came before him. He didn't seem too impressed by my arguments either.

My eyes rested on Gil. He sat stiffly in his usual place at the middle of the table, leafing through the briefing papers I had prepared. I knew he would have studied them thoroughly over the weekend.

'The original plan called for a follow-on investment to be made after one year. We are only six months into the deal. Why so soon?'

His accent was clipped, almost English, what I had come to recognize as the hallmark of the Boston 'brahmins' who had run the city for three centuries.

He looked up and peered at me through his thick glasses. The lenses made his eyes look unnaturally small and hard. I had seen him use this effect many times before to unsettle hopeful entrepreneurs. It was working with me.

'As I mentioned, the market is hotting up,' I replied. 'There are more competitors springing up all over the place. Craig wants to make sure Net Cop is the first to ship product.' I cursed myself as I said this. I was beginning to sound defensive, always a bad position to find yourself in.

Gil's face, wrinkled and weather-beaten from countless days spent under sail in Massachusetts Bay or out in the North Atlantic, watched me, thinking.

There was silence round the table. No more questions. I began to relax. I was going to make it.

'Frank. You helped Simon with the deal, I believe. What do you think?'

I glanced over to the elegant figure of my father-in-law. Despite his fifty-seven years his hair was still light brown, his body athletic, and his face handsome. He was wearing one of his dozens of suits, this one with a subtle check. But his eyes, which usually twinkled kindly, were agitated, worried.

'I don't know, Gil. I've got some problems with this one.'

What? This was not supposed to happen. Frank was supposed to be on my side.

The silence intensified. Everyone looked from Frank to me.

'Yes?' said Gil.

'Simon has laid out the information here well enough,' Frank said, gesturing to the paper in front of him, 'but I think he's drawn the wrong conclusions. There's much more competition out there now than there was six months ago. Maybe we should think about that.'

'But Craig has thought about it,' I said. 'That's why he's sped up the development process! His team is better than any of the small companies, and the big boys are just too slow.'

Frank shifted in his chair. His deep voice commanded attention. 'I'm not sure about Craig Docherty, either.'

Out of the corner of my eye I saw Gil flinch. Venture capitalists are proud of backing people, not businesses. Once you begin to doubt the person, then it is very hard not to doubt the business.

'You liked him six months ago, Frank,' Art said. 'What's changed?' Art was always quick to spot an opportunity to criticize Frank's judgement. He and Frank jostled in a most subtle way for the position of Gil's right-hand man.

'That's true. We all did.' And indeed Craig had made a presentation to the assembled partnership that had gone very well. His energy, dedication and total grip of his business had come through with great force. 'But from what I've seen of him since then, I think he's unreliable. He believes so much in the success of his company that he loses track of what's going on around him. The original plan was for twelve months to the development of a prototype, and that was tight. You can't do it in six without cutting corners. And you can't cut corners in this business without screwing up the product.'

'But he's been working eighteen-hour days, seven days a week!' I protested. 'The guy barely sleeps. And his staff are all working just as hard.'

'So he's driving them too hard,' said Frank. 'He'll make even more screw-ups.'

'Are you saying we should drop Net Cop?' asked Gil.

Frank paused. He leaned forward and rubbed his chin in the way I had seen him do a hundred times before turning down some hapless entrepreneur who had come into our offices looking for us to finance a dream. My eyes sought his, but he avoided them. 'We took a risk with the first two million. That's what we're supposed to do as venture capitalists. But the market's moving away from us, and the entrepreneur's losing perspective. The deal looks different. It would be a big mistake to drop another three million now'

The bastard! I began to panic. Unless I did something immediately Net Cop would be dead. It was a good deal, I knew it. I just knew it. And more importantly I had given my word. Net Cop was Craig's life, and I had promised to support him. I wasn't prepared to go back on that.

'I disagree,' I said. I felt as much as heard a quick intake of breath from Daniel Hall, the associate sitting next to me. Associates didn't disagree with partners at Revere. 'I'm sorry Frank, but Craig seems to me to have done exactly the right thing. The market thinks that his switches are better than everyone else's. He has easily the most advanced security and encryption features, and that's exactly what the big telcos and ISPs want these days. He's got a winner here.'

Gil listened. When I had finished, he glanced across to Frank.

'He's got a higher spec than the competition,' said Frank. 'But we don't know whether he can deliver it-'

'That's why he needs the money for the prototype!' I interrupted. 'So that he can prove it works!'

Frank was silent. Then, for the first time that morning, he smiled. 'I admire Simon's enthusiasm. I've got to admit this looked like a good deal when we invested. But not any more. Sorry, Simon.'

The deal was dying, dying. 'But we can't back out now!' I protested. 'We told Craig we'd invest the next tranche when he met his technical milestones. He's met them. It was in the investment agreement.'

'There's always a way out of an investment agreement, Simon,' said Frank. 'I can think of a couple of clauses in there that could give us an out.'

I paused. I was floundering badly. I felt a nudge under the table. 'Give up,' whispered Daniel, very quietly out of the corner of his mouth. But I couldn't.

'Frank,' I began. 'We made an agreement. We have to stick to the spirit as well as the letter of it. We both know that Craig thought we were committing the second three million dollars. I thought that too.'

Frank didn't answer. He glanced at Gil.

Gil took a deep breath. 'OK, do we go ahead with the extra three million? Frank, I take it you say no?'

Frank nodded.

'Art?'

'No.'

'Ravi?'

Ravi glanced down at my memo through his half-moon reading spectacles. With curly grey hair, a bow-tie, and a large fleshy brown face, he looked more like a professor than a venture capitalist. He thought for a moment, but he could tell the mood of his partners. He shook his head.

'Diane?'

Diane had been listening closely to the exchange. Now all eyes were turned to her. She sat there with perfect poise, her thick dark hair framing her high cheekbones, her small delicate lips puckered in thought.

'I think we should go with it,' she said at length. 'I take Frank's points, but I remember when we did this deal. We knew then we were in for five million. It's an exciting market, and maybe we have got a winner here.'