The competing narratives of the founders of the Alantec, Inc., and the venture capitalists who funded the company, as part of the Advent v. Kalashian VI Ltd. is examining a California Superior Court case. The founder of the company, the switches for computer networks and produced, raised several rounds of funding from venture capital firms that end up controlling the company’s board. As the company continues to miss its revenue projections, the board ousted the founders and brought in … Read more »

The competing narratives of the founders of the Alantec, Inc., and the venture capitalists who funded the company, as part of the Advent v. Kalashian VI Ltd. is examining a California Superior Court case. The founder of the company, the switches for computer networks and produced, raised several rounds of funding from venture capital firms that end up controlling the company’s board. As the company continues to miss its revenue projections, the board ousted the founders and brought in new management. The company subsequently raised two new rounds of financing, which led to a dilution of the interests of the founders of approximately 8% to less than 0.01%. Alantec then a new ‘product, the Power Hub, “which was very successful, and the company eventually went public. The founders sold their remaining shares shortly after the IPO. Two years later Alantec was purchased for the equivalent of $ 70 per share. After the sale, sued the founders, alleging that the venture capital and had committed fraud. Towards their fiduciary duties as a controlling shareholder of Alantec The current case shows excerpts from the trial briefs of the two founders and venture capitalists, and presents competing views on how and why the dilution occurred.
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from
Lena G. Goldberg,
Chad M. Carr
Source: Harvard Business School
13 pages.
Publication Date: Nov 16, 2010. Prod #: 311078-PDF-ENG
Wash out: The Founders ‘Tale and Investors’ Tale HBR case solution

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