When the Well Runs Dry
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."