Staying Afloat With his company, ImageCaf, struggling with financial uncertainty, Clarence Wooten, Jr., faced some difficult decisions.

Staying Afloat With his company, ImageCafé, struggling with financial uncertainty, Clarence Wooten, Jr., faced some difficult decisions. With a burn rate 1 of nearly $50,000 per month, the bridge loans 2 and angel investments 3 of $710,000 would not carry the company to break even. While he was struggling to close a $3 million financing round, a Virginia-based Internet services company, Network Solutions Inc., approached Wooten about selling. 

Should he sell ImageCafé to Network Solutions, or risk losing it all for the potential of a greater gain, if and when the financing materialized? And if he did decide to sell, what was the right price? Time was clearly not on his side.

him an Atari game system. Wooten soon discovered its game cartridges were too expensive for him to purchase. One day, a friend told him that home computers such as the Commodore 64 used program diskettes instead of cartridges. Multiple diskettes could be copied from the original, eliminating having to pay for game cartridges. Wooten also learned that with a computer, games could be transferred between computers through conventional telephone lines using a modem and bulletin board software (BBS). (A bulletin board was a computer that ran 24 hours a day so people could log in and download files from it.) The following Christmas, Wooten persuaded his parents to buy him a Commodore 64 home computer equipped with a modem. 

Preparation Questions

1. Evaluate Clarence Wooten ’ s strengths and weaknesses. 

2. What do you think about Wooten ’s product versus service conclusion? What are the strengths and weaknesses of his argument?

3. Analyze and assess the ImageCafé opportunity.

4. What do you think of Wooten ’s fund - raising strategy? 

5. Should he have taken Dwayne Walker ’s offer?

6. Does he need to raise $ 3 million?

7. How would you respond to the Network Solutions offer? 

8. How would you go about valuing ImageCafé ?

9. What are the personal implications for Wooten if he sells or not?