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Note to Instructors: Radha Jalan and ElectroChem, Inc.: Energy for a Clean Planet
Frances M. Amatucci Susan Coleman
he case illustrates the nancial and managerial challenges faced by a woman entrepreneur in an emerging high-tech industry. ElectroChem, Inc. designed and manufactured polymer electrolyte membrane (PEM) fuel cells as an alternative energy source for commercial application. The rm was losing money when its founder, Vinod Jalan, unexpectedly passed away and his wife, Radha, took control of the business. Under her leadership, ElectroChem grew from $422,000 in 1992 to over $2 million in sales in 2001. Radha aggressively pursued government contracts, a major source of funding for the fuel cell industry. She also successfully negotiated a merger with another fuel cell rm, thereby increasing ElectroChems sales and visibility. Finally, she managed to survive the tactics of a hostile angel investor group who intended to take over the fuel cell tester station portion of her business. In the winter of 2002, Radha was considering how best to compete in this increasingly competitive growth industry, as well as how to obtain the resources necessary to succeed.
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have a background of education and experience in the fuel cell industry. These human capital deciencies initially made it more difcult for her to run the company and left her open to the maneuverings of unscrupulous angel investors. Her persistence and strong will enabled her to survive, but her experience points to the importance of having members of the management team who have education, training, and experience appropriate for the industry.
heavily on the advice of investors who may not have had her interest at heart. Radha saw herself as a victim of discrimination and thought that her investors had taken advantage of her. How might this belief have affected her attitudes and actions? What lessons can potential women entrepreneurs learn from Radhas experience? How do human capital and social capital complement nancial capital for emerging rms? In summary, the following questions may be used to guide a class discussion: 1. What are the competitive forces in the fuel cell industry? Identify the potential opportunities and risks as reected in the driving forces for fuel cell technology. 2. Why did Radha take over the management of ElectroChem? What challenges did she face? 3. What does a SWOT analysis reveal about ElectroChems position within the fuel cell industry? 4. What does your analysis of case Tables 3 and 4 reveal about ElectroChems nancial condition? 5. What steps did Radha take to turn around ElectroChem? How has Radha positioned ElectroChem strategically in the marketplace for fuel cell technology so far? 6. How could Radha have avoided the incident with Bill West and Peter Clinton? What lessons can be learned for future interaction with equity investors? What other sources of external funding could Radha have considered? 7. Evaluate Radhas performance during the 10 years she has led ElectroChem. Develop a set of recommendations for her to strategically position ElectroChem for the future.
Suggested Readings
Amatucci, F.M. and Sohl, J.E. (2004). Women entrepreneurs securing business angel nancing: Tales from the eld. Venture Capital: An International Journal of Entrepreneurial Finance, 6(2/3), 181196. Brush, C., Carter, N.M., Gatewood, E., Greene, P.G., & Hart, M.M. (2004). Clearing the hurdles: Women building high-growth businesses. Upper Saddle River, NJ: FT Prentice Hall. Coleman, S. (2002). Constraints faced by women small business owners: Evidence from the data. Journal of Developmental Entrepreneurship, 7(2), 151174. Eisenmann, T. & Willis, R. M. (2004). Fuel cells: The hydrogen revolution? Harvard Business School case #9-804-144. Boston: Harvard Business School Publishing. Leach, J.C. & Melicher, R.W. (2003). Entrepreneurial nance. Mason, OH: Thomson South Western.
director of the Small Business Development Center (SBDC). As a client of the SBDC, Radha Jalan knew and trusted the director, and agreed to participate in what began as a larger study of ethnic entrepreneurs. Dr. Amatucci conducted all of the interviews, developed the fuel cell industry note, and documented the angel investor event. The initial interviews occurred at the rm and were tape-recorded and transcribed by her. Many subsequent telephone interviews were conducted over time to update the case. Initially, the protagonist, company name, and nancial statements were anonymous and condential, but the passage of time has now enabled the authors to release the case with actual names and location while key actors in the investor event and the nancial statements continue to be disguised. Dr. Amatucci presented an earlier version of this case, Global Clean Energy, Inc. at the 10th Annual Case Colloquium at the Academy of Management Annual Meeting in Washington, DC in 2001. Susan Coleman is the Ansley Chair of Finance at the University of Hartford. She teaches courses in corporate and entrepreneurial nance at both the undergraduate and graduate levels. Her research interests include sources of capital and nancing strategies for women- and minority-owned rms. Dr. Coleman put together the nancial statements for the ElectroChem case and developed those sections of the case relating to nancial issues and problems. She also assisted in the development of the Note to Instructors and in revision of the case over time in response to reviewer comments.
Frances M. Amatucci is an adjunct professor at the Huizenga School of Business and Entrepreneurship at Nova Southeastern University. Susan Coleman is the Ansley Chair of Finance at the University of Hartford.
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