How Not To Raise Money
from the things-you-just-shouldn't-do dept
It was just a couple of weeks ago that Kana was bragging about how they raised $55 million “just because we could”. So, how is it that this week they suddenly announced that they’re asking their shareholders to vote against the funding? It’s a lesson in corporate stupidity. I read the press release from Kana on Monday and the only thing I could figure out from it (they try to put a positive spin on it) was that they must have screwed up something fierce – and were now hoping that their shareholders would cover up the mess for them. It seems that they made a bad deal, badly. They tried to push through a deal to raise money with ridiculously bad terms – that they hoped wouldn’t require shareholder approval. It turns out they screwed that up, and suddenly shareholders needed to approve it. The shareholders looked at the deal and realized that it was a terrible one for them (massive dilution) and started revolting. So, the only way to save some face was to have the board suddenly reverse its position and tell the shareholders to vote against the very deal they made (and praised!) a couple of weeks ago. I wonder how they will ever raise any money ever again. What investors would feel comfortable signing a deal with them again?