AccessLine is a company within the telecommunication industry which was founded in 1989. In order to get started, AccessLine established a relationship with McCaw Cellular Communications, who provided AccessLine with the initial funding. As AccessLine’s business grew, it needed additional funding and therefore the company turned to private investors. Since AccessLine grew rapidly, the management was worried that some investors would only regard an investment as an opportunity to quick returns. AccessLine was not interested in an investor who would take part of the positive cash flows but then exit the investment quite soon. By not turning to venture capitalists, AccessLine could avoid most such investors. Furthermore, since AccessLine had a competent management team and a well-functioning business, there was no particular need of an investor with experience from the business that could provide the company with expertise. Venture capitalists are generally more active than a private investor, which, as mentioned, was not something AccessLine was looking for. Furthermore, AccessLine was probably not willing to give up the amount of control that a venture capitalist would require in order to invest.
In 1995, AccessLine’s strategy changed, and it chose to turn to venture capitalists after all. AccessLine was at this point in need of funding, which would be used to develop strategic partnerships and to fund acquisitions. Since the management team of AccessLine had little experience from mergers and acquisitions, a venture capitalist would be an appropriate investor. A venture capitalist is constantly working with acquiring and selling businesses and could therefore be helpful in evaluating a target company. Another possible reason why AccessLine turned to venture capi ...