Building Businesses at Brainspark Plc.

In June of 1999, Steward Dodd, Noah Freedman, and Richard Davidson established Brainspark, a British business incubator designed to support and grow fledgling new businesses. The Brainspark business model was built on a blend of investing, mentoring, and teamwork, and the creation of an environment that would facilitate and enable knowledge and information sharing among companies. By the first half of 2001, however, Brainspark had suffered a serious downturn in its market value and its cash reserves were dwindling. The case focuses on the debate among Brainspark's management team about the appropriate business model and/or exit strategy for Brainspark.

The Brainspark case offers students the opportunity to analyze various exit options for a publicly quoted, yet highly entrepreneurial firm that has run into problems. The possible exit options include 1) continuation of operations with a modified business and revenue model, 2) merger, 3) privatization, and 4) liquidation. The case also allows students to analyze the value proposition of business incubators. By considering the experience of a particular incubator (Brainspark), students learn about the resource needs of entrepreneurial ventures and discuss how they may be best served. Finally, the case lends itself well to a discussion of the viability of the business incubator concept.