Venture Capital: Not A Love Story

Too often, entrepreneurs who join financiers in marriages of convenience are headed for heartbreak

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By Richard A. Melcher

May 13, 1996 at 4:00 AM UTC

This article is for subscribers only.

The dream wasn't supposed to end like this. Three years after founding Athena Design Systems Inc. in a creaky old customs house on Boston Harbor, Mary F. Howard had to return to her original backers for crucial new product financing. Brynwood Partners II LP offered loans--but only if Howard secured them with the rights to two patents, her most valuable assets.

Howard took the money rather than "shut down the company," but her control of the struggling software maker was quickly ebbing. With sales dead in the water, Brynwood--which owns 75% of the company's shares--ousted Howard and, in early 1995, made its newly hired vice-president for sales and marketing the CEO. Today, the company is little more than a shell. And Howard, like the mythical Athena, has turned warrior, suing her former partner for breach of fiduciary duty. In court papers, Brynwood counters that it dumped Howard only after she had "four years of time to prove herself...and failed to sell a single Athena system."