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Archive for April, 2009

Sneak Peek

It’s time we let everyone get a glimpse of what we’ve been working so hard on for the past few months.  This is the official roll-out of the new software tool used by our in-house analyst team which, due to popular demand, is now available for use by interested investment groups.  If you’re looking to take a test drive, shoot a note to northventure360@dontgosouth.com, and we’d be happy to give you the keys.

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Calling all Potential MBA Interns

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North is rapidly expanding and is currently seeking smart, hard working, 1st year MBA interns as potential additions to our team of superheros. Below is a formal job description.

Early-Stage Venture Analyst – MBA Internship Position

North is seeking top MBA talent to provide support for our analyst team. Our interns will work closely with our team of analysts and will be exposed to a broad range of responsibilities in the venture analysis process. This is a highly selective role and top summer interns will potentially be brought on as full-time analysts after completion of studies.  Although the position is demanding and requires the ability to work independently, our interns are giving tremendous flexibility.

Ideally, candidates will possess a keen entrepreneurial spirit they are looking to sharpen and expand upon.  Strong written and verbal communication skills are a must, as position requires completion of written reports. Candidates will also possess superior interpersonal skills, outstanding quantitative and organizational skills, and a proven ability to work as part of a team.

Candidates should send a resume and CV to analyst@dontgosouth.com.

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Is Your Revenue Model Automated?


The purpose of this element is to determine whether or not the company can automate the revenue model. Transactions and sales take time (time is money); even retailers spend a fortune on making checkout happen just a few seconds faster. For a business to successfully scale and grow, a turn key sales process will prove invaluable. If each transaction requires many human hours and long contractual negotiations then the revenue model will surely suffer.

Transactions that happen automatically without any human interaction (web sales) are certainly the most effective in terms of volume of transactions. The ability for a company to sell its wares at any time makes sure they are leaving no money on the table. A key to speedy growth is the ability for a business to sell their stuff 24/7/365.

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Quick simple transactions that make sense to the consumer are more likely to achieve smooth predictable growth than an overly complicated model or processes. If the transaction process is overly manual, time consuming or difficult, than even the best unit economics may start to break down quickly.

Some key questions we ask when taking an in-depth look at a new venture’s ability to automate their revenue model: Does the business have a long sales cycle (>90 days)? Can it make money quickly (<5 days) without any human interaction?

This is just one of the key criteria forward-thinking investors use when evaluating the strength of entrepreneurs and their new ventures. How do you measure up? Go to www.venturephenomeproject.com to read all 80 criteria and swap knowledge with other entrepreneurs & investors.

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Personal Financial Commitment


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I had an interesting conversation with an entrepreneur last night about the fundraising process for a new company he is looking to pursue.  Although he is still riding out the transition from the sale of his current business to a large corporation, he is

beginning to take steps towards the creation of his next idea.  All this is great, but what really inspired me to tell this story and to shed light onto our investment process was the fact that he was planning to raise money to START the new business, not to grow it.  We hear this all the time, and frankly think it’s unfair. Why should an investor be asked to bet on this idea if the founding entrepreneur hasn’t done so himself?

When an entrepreneur is looking for investment in a new venture the strategic financial needs of the business should warrant the investment of capital that can’t be afforded by the owner.  That said, the personal financial commitment of the founder(s) is a very clear indicator of how strongly the entrepreneur believes in their own business. If they’ve in fact invested some percentage of their own personal net worth towards the success of the company, that shows personal financial commitment.  What percentage of the founders net worth do you feel should be invested in the new company?

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As always, there is a balance here.  We certainly don’t look for the “all in” entrepreneur; extreme risk takers who invest more than they can afford.  Ideally, we look for founders that have invested a considerable amount of their own capital into the business, and have a real “opportunity” cost for venture creation. Is it too much to expect a founder to have put up 30%+ of investable assets into their venture intelligently and constructively to secure competitive advantages? The presence of friends and family investors is also a positive sign when looking at this category.

This is just one of the key criteria forward-thinking investors use when evaluating the strength of entrepreneurs and their new ventures. How do you measure up? Go to www.venturephenomeproject.com to read all 80 criteria and swap knowledge with other entrepreneurs & investors.

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WHERE PROFIT MEETS PURPOSE


North is proud to announce that we’ve been selected by Investors’ Circle to perform our Venture 360 due diligence on their finalists at their Spring Venture Fair in San Francisco, April 19-21.

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Over 350 companies applied to present at this week’s event, but only 21 innovative companies were selected to pitch their business model to investors.

Investors’ Circle is the oldest and largest national funding group devoted to for-profit, socially, and environmentally responsible business. Since 1992, Investors’ Circle has deployed $130+ million into more than 200 companies.

North is excited about our recent partnership with Investors’ Circle, as we’ve always been inspired by collaborating with private investors and forward-thinking entrepreneurs that seek to achieve that desirable blend of economic wealth and social good.

Alex loves this video http://www.youtube.com/watch?v=4YBxeDN4tbk

Alex giving the rundown (and a laugh) to the 21 selected companies.

We strongly believe that by working on consumer-facing ventures rooted in building social value will enable us to overcome many of the challenges we are facing today.

If you’re a private investor, fund manager, or Angel investment group and have an early stage opportunity that could benefit from further evaluation and analysis, please send a short email to northventure360@dontgosouth.com and we’ll set up a time to talk.

Link to video in Alex’s presentation: http://www.youtube.com/watch?v=4YBxeDN4tbk

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The purpose of this element is to determine whether or not the company has done enough consumer research into the psychographics of the target consumer to understand why they buy one brand of solution over another. Sufficient research into the demographics and psychographics of the target consumer are the starting point for understanding why consumers pick one brand or solution over another. Will the consumer want to be associated with the product and/or company? A brand, remember, is much more than a logo or a message. A true brand has the ability to create an emotional value, which in turn drives consumers to spend dollars. One of the most well articulated presentations on this subject is called “The Brand Gap,” which is included below.  If you haven’t already gone through the deck, take a look, it’s worth your time.

Some very important questions one must ask when considering the emotion value proposition of a brand are: 1) Has the company clearly lined up some emotional triggers for their target consumer? 2) Do they understand what motivates their consumer to buy? 3) Does the sales and marketing effort connect with the consumer on an emotional level that ultimately drives the purchasing decision?

Ultimately we are looking for the management’s ability to shape its marketing efforts and sales process to effectively address the emotional needs of the consumer with respect to the product. Does the sales and marketing effort connect with the consumer on an emotional level that ultimately drives the purchasing decision? How important is it that the company looks beyond just features and functions and taps into the deeper “why.” Has the company clearly lined up some emotional triggers for their target consumer?

Do you understand your consumers’ emotional needs? Go to www.venturephenomeproject.com to read all 80 criteria and swap knowledge with other entrepreneurs & investors.

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Innovation is the backbone of our economy.

Without it, we simply won’t have the game-changing economic growth needed to end the global financial crisis.

Even with nearly six million new businesses started every year, the process for creating American innovation remains remarkably inefficient.* The time, effort, and capital wasted on genetically-flawed businesses represents the loss of tens of billions of hard investment dollars and millions of jobs, with only small fraction of companies actually surviving the gestation process.

With so much as stake, creating successful new ventures simply cannot be a congressional afterthought, or a hobby for the wealthy. To accelerate economic growth, the time is now to focus on creating sustainable new ventures faster and with more efficiency than ever before.

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Borrowing from the scientific principles that led to the mapping of the human genome, the Venture Phenome Project is building a Phenotype map of the genetic and environmental factors that ultimately influence the success or failure of a new venture. By tracking and measuring these factors over time, this collaborative research effort is able to “crack the code” on early stage investing.

What Does This Mean To You?

For entrepreneurs, this represents an opportunity to get rare visibility into what a strong venture investment looks like through the eyes of an actual investor. After all, if you’re an entrepreneur and aren’t building your business around the actual criteria you’re being evaluated on, who does that benefit?

For investors, the Venture Phenome Project is a platform for learning from and sharing wisdom with both seasoned investors and forward-thinking entrepreneurs. No one benefits by spending time focused on a venture that has bad DNA. This is your chance to improve your venture evaluation process. By shedding light on the critical factors that influence successful investments, you can make more informed investment decisions.

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If you’re interested in becoming a more efficient investor or entrepreneur, here’s the good news; the results from this interactive research project are open to the public. The information gathered on this site is yours to consume. To make the process more impactful, the best insights will be aggregated into a bi-annual publication to provide a concise and clear blueprint of the venture Phenotypes and their significance in the creation of value.

At the end of the day, all of us (investors and entrepreneurs) are seeking the same result; a significant return on both invested time and capital.

We’re in a state of crisis. The time to optimize entrepreneurship is now.

Check it out, and leave your thoughts…

www.venturephenomeproject.com

* SBA’s Office of Advocacy, 2006 County Business Patterns

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