When Kevin Nikkhoo took the entrepreneurial plunge in 1992, it
was with a modest amount of start-up capital--his own--that he
co-founded Los Angeles-based Vertex Systems Inc. The technology
consulting firm thrived without so much as a loan, providing
technology solutions to the entertainment, manufacturing and
financial services industries.
In 1999, however, Nikkhoo found himself in an unfamiliar
situation. Eager to position his company for significant growth and
to capitalize on the booming IPO market of the late 1990s, he
needed a loan. He was also seeking a commercial lending
relationship that extended beyond just borrowing.
28%
of venture-backed start-ups have received
follow-ups financing since January 2001.
SOURCE:
PriceWaterHouseCooper
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"We talked to many organizations," recalls Nikkhoo,
41, the firm's chairman and CEO. "We found that although
they were very interested in providing a credit facility, they did
not have the ability to scale up with us as we grew. If we needed
to strategically look at the different areas we were going to go
into, we [needed] to feel comfortable that [the organization] could
provide those kinds of services."
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Nikkhoo found credit in his stockbroker's office, of all
places. While meeting with a Morgan Stanley Dean Witter & Co.
broker to discuss his personal assets, he learned the firm offered
credit and advisory services to established businesses like
his.
In January 2001, Vertex Systems finally had its financing: a
long-term loan and credit facility from Morgan Stanley. While the
company didn't go public, Nikkhoo felt Morgan Stanley's
expertise with IPOs and acquisitions made it the ideal long-term
financial partner for his $10 million company.
Originally published in the June 2002 issue of Entrepreneur Magazine
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