Final Venture

Hecht glanced at Diane for help. She didn't give it.

'About a half-dozen.'

'I said, how many?' Art repeated.

'Let me think,' said Hecht. 'Eight.'

'Eight, eh? And who were they?'

Hecht rattled off eight of the biggest names in venture capital, most of them West Coast firms. Diane's face reddened. She should have asked these questions. And so should I.

'I see,' Art said. We waited for the follow-up question. Art seemed to sway slightly in his chair. The silence was becoming uncomfortable. Eventually it came. And why didn't you go back to these firms when you had your model up and running, Mr Hecht? Was it because you knew they wouldn't give you money in a thousand years?'

'No!' protested Hecht. He surveyed the group of venture capitalists. He knew he was in danger of losing us. He sighed. 'There was another member of the team, then. He was a kind of non-executive chairman and he was willing to provide the seed money. I subsequently found out that he was the one the VCs didn't like.'

'Oh really? And what was his name?'

'Murray Redfearn.'

Art and Gil exchanged glances. So did Diane and I. It was clear that they had heard of him and we hadn't.

'Murray Redfearn was involved in a couple of spectacular disasters in the late eighties,' explained Gil. 'A lot of venture capitalists lost money on him. Our first fund even had a small piece of one of his deals.'

Hecht nodded. 'We only found all this out later. So we bought him out, developed the product further, and here we are.'

'You lied to us,' Art said.

'No, I didn't,' protested Hecht. 'I've just told you the truth.'

'But you lied to Ms Zarrilli.'

Hecht looked shaken. 'Diane?' He glanced towards her for help.

Diane paused. She had recovered her composure now. She had a fine line to tread. She didn't want to seem weak to Hecht or the investment committee, but she also didn't want to kill the deal. 'I didn't ask the question, Art,' she said, 'and I should have. But I must admit, Bob, it would have been nice if you had been more open with me on this.'

'Damn right,' said Art. 'Now why don't we tell these jerks to piss off and let us get back to work.'

Hecht reddened. One of his colleagues, the Chief Financial Officer, looked as though he was about to explode.

'Art!' snapped Gil. 'That's enough. Thank you, Mr Hecht,' he said, with a smile. 'That was a most interesting presentation. Diane will be in touch with you very shortly.'

There was an awkward silence as the Tetracom team picked up their presentation materials and filed out of the board room, followed by Diane. She led them to a conference room, where we had agreed they would wait for the committee's decision. Diane returned in a moment.

Gil was red-faced, glowering at Art. He set great store by the image of the firm, and behaviour like Art's was not what he wanted. He no doubt suspected Art was drunk. And he now knew his drinking could do serious damage to the firm.

'Could you leave us while we discuss this deal, Art?' His voice was icy.

'No way,' said Art. 'I have strong views about this deal.'

'I gathered that.'

'If I hadn't asked the questions, you'd never have found out the answers,' pointed out Art. 'And I'm a partner in this firm. I have a responsibility to investors. I have a right to be part of its investment decisions.'

Art was suddenly sounding coherent.

'All right,' said Gil. 'You can stay. What do you want to do, Diane?'

'First I should apologize,' she began. 'I should have asked the questions Art did. Thank you.' She smiled charmingly at him. He grunted. 'I still believe in the deal, though. So I'd like to ask for investment approval subject to checking out Bob Hecht's story.'

'He could be hiding anything,' said Art.

'I think he's probably telling the truth. But it'll be easy to check with the other venture capitalists. Which is what I'd like to do.'

'I can help you with that,' said Gil. 'I'd like to hear the answers myself.'

'Thank you,' said Diane. 'Simon and I have done a lot of work on this deal, and I think it is a truly great opportunity that any other firm would be quick to snap up if they had the chance. You've seen the management, you've seen Simon's Investment Memorandum, I'd like to get your approval.'

'You're not getting mine,' said Art. 'They're liars and scumbags, and I've never seen such an amateurish piece of work in my career.' He contemptuously flicked my memo with his fingers.

'That's enough, Art,' Gil snapped. 'OK, let's take a vote. Diane, I take it you're still in favour.'

Diane nodded.

'Ravi?'

Ravi had been listening to everything attentively. He did his best to avoid political posturing, but he wasn't afraid of making a difficult investment decision. And at a time like this, an unbiased investment decision was just what was needed. He took off his glasses, and began to polish them. 'I'd like to be absolutely sure that Hecht isn't hiding anything else,' he said. And I'd like to see the notes on the calls you make to the venture capitalists they spoke to last year. But provided those are OK, I think we should go ahead.'

Art?' Gil turned to him warily.

'No fucking way.' Art stared at his Managing Partner belligerently.

That was probably his mistake. Gil was in a nervous frame of mind, and if Art had subtly played on that he might have succeeded in killing Diane's deal. Frank would have known how to do it. But Gil would not tolerate open war amongst his people. 'We do the deal.'

I followed Diane to the conference room where the Tetracom people were waiting. Diane gave them the good news, and then gave Hecht a firm but polite roasting. She was trying to assert her authority at as early a stage as possible. Hecht seemed confident that Gil and Diane's checks wouldn't bring up any nasty surprises, and on that basis we started work on the term sheet.

We broke at nine for dinner. We went to Sonsie's, a chic restaurant on Newbury Street. Diane was charming. Although Hecht and his boys were pros, I could see Diane's technique working. She used a mixture of charm and firmness to get what she wanted. Rather like a good teacher in a difficult school, she managed to inculcate a desire to please her in the people she dealt with. She had Tetracom eating out of her hand.

We left at eleven with promises to meet up again at eight the next morning. I was walking into the street to hail a cab when Diane caught me.

'Simon, I know it's late, but I'd like to go through those financial covenants again – see whether we can live with management's figures. Could you spare a half-hour to go over the numbers now? I'm sure it'll help us tomorrow'

She was right. It would. I was tired and I wanted to go to bed, but Diane was the boss, this was a deal, and venture capitalists didn't go to bed early if there was work to be done on a live deal. I wondered why not sometimes, but that was the convention.

'OK,' I nodded, 'I'll get a cab.'

'No need to go all the way to the office,' said Diane. 'My apartment is just around the corner.'

I gave her a sideways glance, which she ignored. I was too tired to argue anyway. 'All right,' I said. 'Lead the way'

It was, literally, just around the corner. The electrician's daughter from New Jersey had done well. The furniture was either expensive and comfortable or expensive, antique and European. The art was expensive, modern and American or oriental. The whole thing was all very tastefully done, and very relaxing.

'Coffee?' she asked.

'Sure.'

She dumped her copy of the base case forecast on the mahogany dining table, and fiddled about in the kitchen area. I pulled out my laptop and crunched some numbers. She kicked off her shoes and sat down next to me. The legal documentation contained a set of financial minimum ratios. If Tetracom's management broke them, they would be forced to hand over most of the company to us. These ratios needed to be set at a level that was loose enough to be fair, but tight enough to ensure that we could step in before the whole company went bust. That was what we were in the middle of negotiating, and that was what Diane and I had to sort out before the next morning.