How Attractive Is Spotfire’s Business Opportunity

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Spotfire’s round II - valuation

Entrepreneurship – Case write up

Bharat Sharma

Section A – Full time MBA

Class of 2016

1. How attractive is Spotfire’s Business Opportunity?

Spotfire is a software development firm selling visualization tools (mostly plug-ins) for analysis to Pharma, Biotech and Chemical companies. Use of visualization tools in this industry is a breakthrough, development of which was supported by the PhD initial work of Christopher Ahlberg, the CEO & founder.

Interms of business opportunity, the initial industry response has been very positive with several players in the industry seeing significant value addition to their existing analysis softwares, providing data mining insights and other statistical inferences, which drastically reduces the number of analysis steps. Thus enabling reduction of lead time in drug discovery or chemical compound development and other innovative processes in a big way. They offered two product ranges – Sportfire Pro ( the flagship data visualization tool which is applicable to a large variety of industries and service companies) and other  plug-ins (specific to industry or products, such as “structure visualizer” that linked Spotfire Pro to Chemical Analysis database software – MDL).

The dependency of most companies on one or two large players – such as MDL, makes the plug-ins market extremely attractive with large installed capacity (seats). The response from customers such as Unilver on using the product, is extremely positive – indicating the Spotfire could have a hit a potential latent need in the industry. Even assuming the current product offerings installed capacities in the chemical industry alone for product such as MDL (90% marketshare) is nearly 30000 seats ( SKUs) and an additional potential of 144000 seats in the pharma and biotech space. Compared to the market potential current sales are approximately 500 seats for the year 1997, which indicates a large and attractive market potential.

1. How do you assess the founding team?

The founding team at Spotfire is an interesting read, since its seemingly more of a one-man army (Christopher Ahlberg) than a complete team. However his co-founders Staffan Truve (CTO) and Erik Wistrand (Program Manager) are seemingly still key members of the small management team.

While the current organization – a small multi-national startup of 18, boasts of a lot of complementary competencies in the management team, there is much to be done.

Ahlberg, comes across as the young and daring business leader who’s successfully made the transition from a technical genius (PhD) to an entrepreneur. His success has not only been in terms of integrating his subject expertise in data visualization and human interaction to a successful range of product offerings, but also in selling this concept well to investors, employees and customers.