InterActive Productions is a start-up company providing on-line, interactive software accessible through the Internet. The company had received $350,000 in seed money from Compuline Online Services to bring its first interactive product, Golf Interactive, live for Compuline subscribers and other Internet users. The company is now negotiating with Redden-Post, a Silicon Valley venture-capital firm, for "first-round" financing. The issues under consideration include valuation of the company, equity ownership for the investors and founders, composition of the board of directors, operating covenants, and equity-incentive clauses for the owners should they achieve or exceed their goals. This case and its companion, "InterActive Productions: Cameron Alexander" (UVA-QA-0495), form a two-party, multi-issue, scorable negotiation exercise.
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