Edocs Case

Q1

Edocs has already had their product released, at least their first verison. So the business of bill presentment in which edocs is evolving is something which has a huge potential growth, and furthermore, edocs, is currently enjoying, thanks to the selling of its product and the market for bill presentment booming.

A few words on what to expect from Guerster:

Guersters stength :

He is an expert in internet start-ups, so he's perfectly able to identify opportunities of this kind of business with which he is very comfortable.

Guesrters weakness :

He is new within the venture capitalist business and under a lot of pressure. But thankfully for him he can be reliably supported by other partners from CRV.

Investment in Edocs, is therefore far less risky than in a company which hasn't launched its product yet.

CRV agree with the business plan of edocs otherwise they wouldn't offer them a deal.

By not shopping the deal around, Guerster wants to avoid having other VC offering better terms to Edocs, which is risky, because CRV knows that edocs can be potentially very rewarding, and don't want to miss out on such a business.

But having CRV as an investor is a proof of reliability, credibility and high potential growth for any start-up, and Guerster knows, that such a reputation is a great asset.

The fact that Laracey wants to stay CEO is an issue with Guerster and CRV, because although, he is the co-founder of edocs, and wishes to go all the way with it, CRV know that at some point, somebody with experience in driving a company upward is essential, people who "constantly" do that. For CRV, it is just a way to, first protect their initial investment, and second, have the highest return possible.

There is also an issue with Canekeratne's family, VC know that when a family which part-owns a company with "investors" things usually don't turn out so well. The family might not agree with what the investors' management wants to do to take the company forward, and therefore slowdown or even stop the company's growth, at least the growth wanted from an investors point of view.

In order to go forward, the board must be on the same path, and no differences must be encouraged. For Guerster, Canekeratne isn't bringing any real value to the company's future plans.

Such an issue, could lead to the fact that, at the end, none of edocs' founders would be on the board of directors, or maybe just Laracey.

Last "big" issue for Guerster, is what happens if CRV can't find a second investor. In the