Venture capital investments in Sierra On-line

HOME Forums Ken Williams Questions and answers / Thanks Forum Venture capital investments in Sierra On-line

Viewing 1 reply thread
  • Author
    Posts
    • #24561 Reply
      Unknown,Unknown
      Participant

      Dear Ken,

      I am a business school professor doing a fairly big research project that compares the ways in which the growth of high-tech companies has been financed in different countries. The project is focusing on video game software companies in the US, Japan, France, and Britain. A short (preliminary)paper on French and British firms, which appeared in a book called Secrets of the Game Business, can be found at http://faculty.insead.edu/lazonick/papers/TheEuropeanChallengeArticle.pdf. 

      My colleague Mary O’Sullivan and I have gathered lots of information on the growth of Sierra from its founding, and this website has been very helpful. We don’t, however, have much good information on the involvement of venture capitalists in the company. From Securities Data Company we know that there was a total of $8.24 million in vc funds invested in Sierra, involving, among others, General Atlantic Partners, TA Associates, Harbour Vest Partners, and Early Stages Company. But we would actually like to know the amounts that each vc put in, the timing and rounds of investments, the importance of vc funds relative to internally-generated funds as well as individual investors, the distribution of ownership, etc. I wonder whether you would be able to share some of this information with us.

      Yours,
      Bill Lazonick
      william.lazonick@insead.edu

    • #24562 Reply
      Unknown,Unknown
      Participant

      (re: Venture capital investments in Sierra On-line) But we would actually like to know the amounts that each vc put in, the timing and rounds of investments, the importance of vc funds relative to internally-generated funds as well as individual investors, the distribution of ownership, etc. I wonder whether you would be able to share some of this information with us.

      Bill:
      I started to read your paper, but quickly realized I need more time for it… I’ll return to it after I finish chasing some bugs…
      With respect to venture capital:
      It has been over 25 years since Sierra’s first venture capital round. I really don’t remember what venture capital we raised, or who from.
      Our first round was only $1.2 million, and was mostly TA Associates, with a small amount by Alex Brown and someone else who I don’t remember.
      We raised a second round, of around $5 million a year later (approx. 1981) from TA Associates, Early Stages, Alex Brown, General Atlantic, and ??? I think TA lead the round, and put in $2 or so of the round.
      I don’t believe there was a third round, although, in 1983 we almost bankrupted, and there was a small round (approx. $2 million) which came in as debt, with an equity kicker. We turned the company around almost immediately, and wound up not needing the money. It was repaid within a few months of having been borrowed. The bad part was that we gave HUGE options to purchase additional shares as an incentive on the debt, and Roberta and I became enormously diluted as a result.
      We raised $20 million in our IPO, which I think was in 1988. We then followed this with a secondary stock offering ($30 million) in 1991, and a convertible debt deal ($50 million) in 1993.
      In approximately 1994, we did a small venture capital round (unusual for a public company) of approx. $5 million, with General Atlantic. This money was to form a joint venture between General Atlantic, AT&T and Sierra for The Sierra Network (TSN) – an online games network.
      My recollection is that we had $50 million plus in cash at the time we were acquired.
      I wish I could give you more detail – but, it has been a LONG time…
      -Ken W

Viewing 1 reply thread
Reply To: Venture capital investments in Sierra On-line
Your information: