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logjamcanoe

The following excerpt is taken from Breaking Through The Broken: The Transparent Guide To Overcoming The Inefficiencies In Early Stage Venture Capital.

A good presentation with a good PowerPoint given by an individual with a strong personality can easily sway a room full of investors into cutting a check. Investors need to be sure they’re not getting charmed out of their hard earned cash and that the great presentation was great because of what was being offered. Investors need a better mechanism for filtering investments, a standardized venture “combine” if you will. There are simply too many new ventures looking for help and money, and the process for filtering these opportunities is still based on a complex network of personal relationships that will never scale to meet the market needs. As the global economy expands and moves forward, new systems and technologies need to be implemented to accelerate American innovation as well.

As we mentioned, trust is key, so an investor may make a move on a deal because it was given to him or her from a trusted individual (as a favor, for example) even though it may not be the best deal for them. Angel networks provide some buffer between enthusiastic entrepreneurs and investors, but more often than not the Angels are the ones who are doing all the screening work anyway; it’s not as if they can just show up with the confidence that all the pitches they see will be high quality opportunities.

The answer to this problem is pretty simple; look at the entire investing ecosystem and see where there are constraints. Then we need to collectively implement plans that remove those constraints. The systems and technologies are at our fingertips, it’s time we stepped up and innovated ourselves.

Entrepreneurs need to stop jumping in just upstream of a logjam and wondering why they aren’t floating downstream to paradise. Here’s a tip; paddle to shore, load your canoe onto your back, and hike around the blockage, and then put in downstream. Ignore the reams of angry entrepreneurs clamoring on and on about how the market is this or how the market is that, or go ahead and join the masses pushed up against the dam who are wondering what will happen next.

If you’re interested in learning more about how a Venture 360 due diligence engagement can make you a more effective and efficient investor or entrepreneur, please contact us by sending a short email introduction to northventure360@dontgosouth.com and we’ll set up some time to discuss how we can help you avoid the logjam.

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FOCUS

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The purpose of this element is to determine whether or not the company has clear focus. Often new ventures, in an effort to build up multi-billion dollar financials, expand their offering to many different products/services. Does the venture have a clear path for the business, not just offer a mixed bag of various products/services and revenue models? While the attraction to offer the target consumer more than one product/service may seem great on paper, more often this causes dilution in the efforts and stalls all areas of growth. Should investors be excited or afraid of a venture that has 12 different revenue streams?

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With a lot of today’s web companies a focused intention turns fuzzy as the management team wrestles with how they will monetize their site. Although there are many great ideas out there, only a small percentage actually build a revenue strategy into their new venture. Instead, they built a “cool” site and try to tack on a monetization strategy after they launch. Thus, a site built around a single idea begins adding features in an effort to become profitable. More features are not always a good thing, as the team will likely lose focus on their original goal. Key point: making money should not be a fuzzy afterthought, but rather should be a central focus.


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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