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When the Well Runs Dry

This Texas entrepreneur dug deep to replace VC funds he lost unexpectedly.

What's an entrepreneur to do when investors back out in the middle of an $80 million-plus construction project? Jack Gray, 48, knows the answer from firsthand experience. Gray's Austin, Texas, company, Gigared, was building a 1,100-kilometer-long telecommunications network in Argentina when his American VC investors abruptly backed out in September 2001--still $6 million shy of completing their investment.

Gray scrambled to renegotiate terms with vendors and debtors, invested more of his own money, and looked for new VC investors. By offering a greatly reduced stock price, Gray received enough in new investments to complete the build-out. With 2005 revenue expected to top $5 million, Gigared is once again in the black.

Says Gray, "When you get burned that badly, you want to have someone you know you can trust. That's a huge component of picking a VC partner."

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This article was originally published in the July 2005 print edition of Entrepreneur with the headline: When the Well Runs Dry.

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