BladeLogic, a high flier in the large and growing market of data center automation software, had reached a critical juncture. The company, which had already garnered two rounds of venture funding and closed deals with dozens of blue-chip firms, appeared to be headed in the right direction. Revenues, however, were becoming harder to forecast.
As Chief Executive Officer (CEO), Dev Ittycheria's leadership position was entirely based on his ability to execute in a tough, high-stakes environment. Monthly board meetings were becoming increasingly tense; BladeLogic was becoming vulnerable to missing its revenue forecasts unless one or two "big" deals came through at the end of each quarter.
With less than 12 months of cash left at the firm's current burn rate, Dev knew that they were going to need another round of capital well ahead of schedule. Current investors were in no mood to put more money in at a higher valuation. In fact, BladeLogic was facing the real prospect of a down round. Dev knew they had to get additional capital fast ... but how could he secure a new financing round without the participation of existing investors? At what price would the current investors participate?
 Down round: This is common jargon within venture capital. It refers to an investment round wherein investors value a company at a lower price per share than was garnered in the prior investment round.
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