EE204: Business Management for
Electrical Engineers and Computer Scientists

Juniper Networks

Read

  1. Read: New Venture Financing
  2. Read: Funding New Ventures: Valuation, Financing and Capitalization Tables
  3. Review: Alternate Sources of Financing
  4. Read: Juniper Networks

Optional Background Reading

  1. Juniper S-1 registration to sell stock to the public

Case Summary

Details the history of Juniper Networks, with specific emphasis on idea formulation and on founder Pradeep Sindhu's decision relating to funding the company as well as his relationship with its venture capital investors. Also explores the decision the company's CEO, Scott Kriens, faced when considering the path of corporate investment.

Discussion Questions

  1. What did Vinod Khosla see in the idea presented by Pradeep Sindu that got his attention and lead to the financing by Kleiner. Perkins, Caufield, and Byers?
  2. Evaluate Pradeep Sindhu’s fundraising strategy. What were his criteria for selecting venture capital partners’ and what did he expect from his venture capital partners?
  3. What concerns might Scott Krien have about Juniper before accepting the CEO Job? How do you think he resolved them?
  4. How did the role of venture capital change in the growth of Juniper from the time of Pradeep’s meeting with Vinod Khosla through Scott Krien’s attempt to raise money from corporate partners? Had the company outgrown the ability of venture capital investors to contribute? Be prepared to answer from the vantage point of both the venture capitalists and the entrepreneur.
  5. What criteria should Scott Krien use in identifying and evaluating the venture and corporate investors for the third round of financing? How should Scott structure the round among existing investors, any new venture investors, and corporate partners who wish to invest? Should he offer the corporate investors a board seat(s), if so why? If not, why not and how does this affect the relationships among the investors?
  6. Evaluate Scott’s statement at the bottom of page 11, “It’s easy to get caught up in unnecessary complexity and miss the elegance of being focused on a simple set of things that make a difference.” Can such a philosophy sustain Jupiter against Cisco?
  7. Below is a simplified version of the capitalization table for Juniper Networks taken from its S-1 registration statement filed at the IPO? What was the company market capitalization and what % ownership did each of the different groups have at each financing event?

Juniper Capitalization Table (Shares are in '000)