Entrepreneurs
Our Approach
Every potential investment begins with your submission of a Confidential Information Memorandum ("CIM") for our board to review. The information we require in the CIM is similar to that contained in a typical business plan, with some exceptions. In particular, during the evaluation stage of a venture, we are more interested in you and your team's background than we are with your ability to cut and paste "hockey stick" revenue projections onto a graph. When we decide to pursue an opportunity, we will work with a potential portfolio company to determine, jointly, realistic financial expectations. After analyzing the CIM, we attempt to tailor an investment and governance strategy consistent with the level of risk associated with the venture.
Outline of Required CIM Data
1. Positioning
Detailed description of your company's product (its core benefits) and how it is positioned against incumbent companies and products in your market space. This section should include an overview of your supply strategy, your operational strategy and your sales/marketing strategy. Also indicate whether you have proprietary technology and/or intellectual property that is, or can be, patented.
2. Market
Detailed description of the target market(s). What is the size of the market and its growth prospects? Who are the incumbents? What are the barriers to entry?What is the unmet market need that is addressed through your value proposition? Let us know that you understand the markets, the players, and what it takes to compete effectively. And let us know how you think the dominant players in your market will respond to your value proposition once it is introduced.
3. Sales/Marketing
Describe in detail how you plan to reach target customers. What is the selling cycle? What expertise does your company already have with respect to executing your sales/marketing plan? What distribution channels will you pursue to deliver goods and services to customers? What is your projected cost to close each sale?What after sale support is required?
4. Growth Strategy
Describe the current development status of your company. How long long has your company been in existence? How has it been funded? What work remains to be completed before you can achieve positive cash flow? What is the timeline for completing significant milestones required to achieve positive cash flow? What are the most significant developmental challenges that your company presently faces?
5. Financial Analysis
Provide pro forma income statements and pro forma statements of cash flow for the next three years. Note any funding requirements necessary to achieve positive cash flow. Describe events (including future funding rounds if necessary) that will ultimately result in the company generating positive free cash flow. Explain all key assumptions relating to your financial projections. What are your projections for future liquidity events, e.g. IPO, acquisition, etc.?
6. Capitalization Summary
Identify the amount and sources of funding to date, e.g. founders' contributions, previous third party funding, etc. Identify the major uses of funds for each prior and anticipated round prior to any projected liquidity event/exit round.
7. Management Qualifications
Identify the management team and provide detailed descriptions of their respective backgrounds and current roles. Also indicate who is full time, part time and "on the bench" waiting for funding. Also identify members of the board of directors and board of advisors. For all management and directors, highlight ownership interests and strategic value that they bring to the company.
8. Exit Strategy
What is your projection for a major liquidity event such as an IPO, and what do you see as a realistic EBITDA multiple for the valuation of firms in your market?
9. Je Ne Sais Quoi
We don't know what we don't know. Go beyond the numbers. Tell us why we should be excited about this venture. Tell us about the history of the innovation. The "eureka" moments. Tell us why we should be excited about the people on your team who are necessary to make the venture a success. Tell us what you think we need to know about you and your company.
Every potential investment begins with your submission of a Confidential Information Memorandum ("CIM") for our board to review. The information we require in the CIM is similar to that contained in a typical business plan, with some exceptions. In particular, during the evaluation stage of a venture, we are more interested in you and your team's background than we are with your ability to cut and paste "hockey stick" revenue projections onto a graph. When we decide to pursue an opportunity, we will work with a potential portfolio company to determine, jointly, realistic financial expectations. After analyzing the CIM, we attempt to tailor an investment and governance strategy consistent with the level of risk associated with the venture.
Outline of Required CIM Data
1. Positioning
Detailed description of your company's product (its core benefits) and how it is positioned against incumbent companies and products in your market space. This section should include an overview of your supply strategy, your operational strategy and your sales/marketing strategy. Also indicate whether you have proprietary technology and/or intellectual property that is, or can be, patented.
2. Market
Detailed description of the target market(s). What is the size of the market and its growth prospects? Who are the incumbents? What are the barriers to entry?What is the unmet market need that is addressed through your value proposition? Let us know that you understand the markets, the players, and what it takes to compete effectively. And let us know how you think the dominant players in your market will respond to your value proposition once it is introduced.
3. Sales/Marketing
Describe in detail how you plan to reach target customers. What is the selling cycle? What expertise does your company already have with respect to executing your sales/marketing plan? What distribution channels will you pursue to deliver goods and services to customers? What is your projected cost to close each sale?What after sale support is required?
4. Growth Strategy
Describe the current development status of your company. How long long has your company been in existence? How has it been funded? What work remains to be completed before you can achieve positive cash flow? What is the timeline for completing significant milestones required to achieve positive cash flow? What are the most significant developmental challenges that your company presently faces?
5. Financial Analysis
Provide pro forma income statements and pro forma statements of cash flow for the next three years. Note any funding requirements necessary to achieve positive cash flow. Describe events (including future funding rounds if necessary) that will ultimately result in the company generating positive free cash flow. Explain all key assumptions relating to your financial projections. What are your projections for future liquidity events, e.g. IPO, acquisition, etc.?
6. Capitalization Summary
Identify the amount and sources of funding to date, e.g. founders' contributions, previous third party funding, etc. Identify the major uses of funds for each prior and anticipated round prior to any projected liquidity event/exit round.
7. Management Qualifications
Identify the management team and provide detailed descriptions of their respective backgrounds and current roles. Also indicate who is full time, part time and "on the bench" waiting for funding. Also identify members of the board of directors and board of advisors. For all management and directors, highlight ownership interests and strategic value that they bring to the company.
8. Exit Strategy
What is your projection for a major liquidity event such as an IPO, and what do you see as a realistic EBITDA multiple for the valuation of firms in your market?
9. Je Ne Sais Quoi
We don't know what we don't know. Go beyond the numbers. Tell us why we should be excited about this venture. Tell us about the history of the innovation. The "eureka" moments. Tell us why we should be excited about the people on your team who are necessary to make the venture a success. Tell us what you think we need to know about you and your company.