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Posts Tagged ‘north venture partners’

NorthSharkTank

North was recently quoted dropping some knowledge in the article, Real-Life Lessons From Shark Tank on Entrepreneur.com.

Here’s an excerpt:

Know when to pitch. Entrepreneurs with a well-developed product and proven financial success have the best luck with the “sharks,” says David Brody, a managing partner at the venture analysis firm North. “Nothing builds momentum like demonstrating you know how to make a cash register ring,” Brody says. Krinzman cited the entrepreneurs who failed to net funding for their “fun house” in Times Square as an example, saying they sought capital in the idea phase of their business planning.

READ THE FULL ARTICLE HERE

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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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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.

vpplogoblog

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.

dna

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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One of the most powerful forces for managing people, and determining the direction of a business is compensation. That which can be measured and that upon which people will be paid, are both core drivers of a business. The goal of this element is to seek a healthy balance between keeping the entrepreneur focused and driven vs. comfortable and overly satisfied. Is the Management Team paying themselves an excessive amount of money? Do they have a clear bonus structure or is their comp plan way off base?

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Ideally, we’d like to see a compensation structure that keeps the entrepreneur and his team committed, focused and driven to succeed. There should be strong long-term and short-term equity incentives for all employees as well as below market salaries with detailed strategic bonus structure in place.

wall-street

The boys (and girls) on Wall Street have been getting into huge trouble these days because of their absurdly high compensation packages despite taking on TARP funds. In many ways this is analogous to the way we look at new ventures. If the company is making no money, or losing it for that matter, than is it fair that employee salaries be above market value?

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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The purpose of this Phenotype element is to determine what if any debt the business may have at the time of the financing, and more importantly if that debt will be serviced immediately upon closure of the round. What one isn’t looking to do is to fund a company only to have all the cash go out the door to service old debt, leaving the company with no cash to operate. Ideally there is no debt, or debt that converts to equity at the time of the financing. If there is debt after the financing, the terms should be examined to determine what impact it will have on cash flow. There should also be provisions that give the current investors some protections in the event of a wind up. In addition, keep an eye out for and examine any investment banking agreements that may impact the cash position upon closure of the round.

debt

The definition of debt here is broad and includes trade financing, outstanding credit (even personal credit card balances if known), informal borrowing from friends and family, bank lending, private loans, convertible securities or other forms of debt, formal and informal.  Will such debt need to be serviced immediately upon closing this round of financing?  Are there any existing agreements (e.g. with investment bankers) that may impact cash or equity upon closure of the round, such as warrants or convertible securities? How can existing debt hamstring a new venture?

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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The purpose of this element is to uncover what can be one common way to rapidly expand and grow a business: the second serving. One of the easiest ways to grow revenue is to sell the consumer a second offering after completing the first transaction. What to look for here are types of secondary offerings, some are automatic (subscription) and some are IP based (printer cartridges) and others are more associative (chips and dip). And others might include product upgrades or add-on services.  The more likely and the frequent follow-on transactions occur, the faster and more profitable the business can grow as a result of lower overall customer acquisition costs and increased customer lifetime value.

handcuffs

Some questions we ask when looking at a new venture: Is the business a one-off transaction or is it the holy grail of razors handles and razor blades? Sometimes the desire to “lock up” the consumer into a proprietary world can scare them off. Handcuffs can either be scary or they can be fun, it’s all about context.

soft-handcuffs

Are you selling razors and razorblades? Go to www.venturephenomeproject.com and share your experiences with investors and entrepreneurs.

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marketing-101The purpose of this element is to determine whether or not the business has a strong marketing plan in place, and if that plan is something that can be executed with the capital available. There are two key components to a great marketing plan:

1. Brand strategy – Without a clear and compelling brand, a new venture is just another fish in a school of sardines. A unified brand provides a powerful springboard for all sales and marketing initiatives.

2. Messaging – Communicating one’s story or business solution to the target market in a positive and effective way, whether through viral marketing, strategic partnering or traditional PR and advertising, is business 101, but not always easily executable.

Marketing, after all, is any business’s strategy for reaching and communicating with its target consumer. There is, of course, a great deal of research that must be done in order to target the exact demographic most likely to buy your product. As a startup, a misstep here can likely be fatal; direction your brand’s message to the wrong people will waste valuable resources.

superbowl

Super Bowl ads, for example, are great fun and make entertaining water cooler talk on Mondays, but they’re not probably not the most strategic and most affordable tactic for start ups. Is the proposed marketing plan is reasonable and solid strategies can be executed with the resources on hand? How important is the marketing plan to the success of the venture?

What’s your marketing strategy? Go to www.venturephenomeproject.com and share your experiences with investors and entrepreneurs.

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