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Posts Tagged ‘Venture 360 Report’

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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The crew at Venture 360 (a North venture…) has just teamed up with Marc and Clint over at Startup Weekend to bring their throngs of ambitious entrepreneurs some valuable insight and to support Startup Weekend in their mission to foster more innovation around the globe.

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Startup Weekend is a 54 hour startup event that provides networking, resources, and incentives for individuals and teams to go from idea to launch. Yep, you read it right. Attend a weekend and you’ll be able to network with like-minded local developers, innovators and entrepreneurs. Be apart of creating a company. And as they like to say about their events, they’re “No Talk. All Action”.

Attendees of upcoming Startup Weekend events will not only receive some pocket-pleasing discounts on Full Venture 360 analysis reports, each formed team will receive complimentary access to the Venture 360 analysis software to help them develop their business plans and put their weekend ventures on the right track.

The strategic partnership will kick off at the upcoming Women 2.0 Startup Weekend in San Francisco, August 28-30, 2009 and the Startup Weekend Redmond @ BizSpark on the exact same weekend. Both events will have excellent turnouts, so we recommend you snatch up a ticket fast.

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


kickingtiresBuying a used car is an exciting process, but coming home with buyer’s remorse is easy if you don’t do your homework. To avoid a financial disaster, not to mention having a two-ton paperweight parked in your driveway, it’s prudent for any buyer to bring an experienced mechanic with them to look at the car before an offer is made. Why not do it yourself? Unless you’re a gear head with extensive knowledge of the vehicle you’re looking at, you’re better off shelling out the 300 bucks to make sure you’re not going to have to sink thousands into the car as soon as you get it home.

A quality mechanic with experience in checking out used cars will have a systematic inspection process that will cover all the bases in terms of the integrity of the car. Their trained eye will surely find the spots where the previous owner slapped on some Bondo to cover up where they were sideswiped, and can sniff out the sawdust in the engine.

“When excited buyers get emotionally caught up in the vehicle purchase, they often miss mechanical, cosmetic, and safety issues during visual inspections and test drives…to eliminate much of the anxiety and get an accurate picture of the condition of the vehicle, many buyers choose to have a pre-purchase inspection (PPI) done before the sale is final.” – JD Power & Associates.

Did you know that 1 out of every 10 used vehicles has hidden problems from its past? This well-known fact has led to the building of two successful businesses that assist the consumer when making a decision about a used vehicle. If you’re in the market for a used car and haven’t yet heard of CARFAX and AutoCheck, take notice. For just a few bucks you can perform your own PPI over the Internet.

carfaxCARFAX’s pitch is that you don’t have to rely on a stranger’s truth in advertising to find out about the mechanical and driving history of the vehicle they want to sell you. A CARFAX Vehicle History Report includes: 1) Title information; 2) Accident History; 3) Odometer Readings; 4) Lemon History; 5) Number of Owners; 6) Accident Indicators (like airbag deployments); 6) State Emissions Inspection Results; and 7) Service Records. All the critical information you need to avoid driving home with a lemony scent. AutoCheck tries to differentiate their service by attributing a score to each vehicle, although the services are basically one in the same.

“Many used car buyers quickly dismiss the thought of buying a CARFAX report because of the money, but let’s get real, the $25 spent on a quality vehicle history report is the best investment you will ever make. There are thousands, no probably millions, of drivers who wished they had spent the measly $25 to look into a car’s history instead of spending thousands of dollars on a car that has a damaged history, salvaged title, or is even a lemon!” – Jake Newberry, automotive industry insider.

So we’ve looked at three separate industries where big-ticket buying behaviors have driven the creation of tools and techniques that enable both sides of the equation to benefit. Athletes know what criteria they will be measured on and can train accordingly. Real estate agents know the impact a third party inspection will have on the transaction so the can gauge whether or not they want to provide it, or push it onto the uninformed buyer. And CARFAX has created a way for buyers to pull an honest background check in an industry where the deceptive salesman is legendary.

In each of these our last three blog posts, we see lessons from worlds of Real Estate, Professional Sports, and the Automotive Industry that need to be applied to early stage investing. These systems, tools, and processes ALL serve to accelerate trust and enable transactions. Entrepreneurs and investors, we hope you all took good notes.

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 talk shop.

Side Note; I also happen to know someone that is looking to purchase a used 2008 or 2009 Prius Package #5 in dark grey or silver. They’ll pay cash. And yes, they’ll require a VIN# as they’ll be conducting there own due diligence on the vehicle before they invest:).

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Professional sports franchises spend thousands of dollars on scouting, background checks, and running draft prospects through a series of mental and physical tests before they decide to invest millions of dollars. General Managers look at everything before risking their pick on an expensive draft pick. This is even truer when it comes to making a first round selection.

kwamemisseddunkTake the story of Kwame Brown. Back in 2001, the Washington Wizards had the honor of drafting #1 in the NBA Draft. With their pick they decided to choose Brown, becoming the first team to ever select a high-school prospect with the first overall pick. While still playing in the league, Brown’s career just never lived up to the hype. When drafted, Brown was 6-11, an imposing 250 pounds, and a gifted athlete. He was strong, had quick feet and a ton of potential. But after Washington selected him #1, many scouts said they questioned whether his small hands would hinder his play. They noticed in pre-draft workouts that Brown was having trouble catching passes and he missed quite a few dunks.

Small hands? Yep, out of all of the upside of this young man, it’s his small hands that wound up being the primary liability of this particular investment. With professional sports, like early stage ventures, you have to look at the entire investment (right down to the little details) before moving forward with a big decision. Sure, some mental and physical attributes can be suppressed or enhanced later on, but when that attribute is fixed, like hand size; you’re stuck with it. Ironically, whose decision was it to draft Brown? Michael Jordan. Yep, MJ was just given the title of President of Basketball of Operations and Brown was his first ever draft pick. So it just goes to show you, you can be the greatest basketball player of all-time and still be a mediocre evaluator of talent…

The National Football League (NFL) has developed a unique system for their 32 franchises to evaluate and score college seniors who may potentially become NFL players. “The Combine”, as it’s known, is a standardized system of physical and mental tests which, along with full medical examinations, gives teams a huge amount of objective and standardized data which they can use to weed out and ultimately select which players could be a potential fit for their locker rooms.

“I think it’s the total picture you get from the combine. The combine is another means of helping teams make good decisions, and the escalating cost of signing first-round draft picks makes the decision-making process all the more crucial. Teams spent a total of $160 million on signing bonuses for last year’s first-round picks. They want to make sure they know what they’re doing.” – Tony Dungy, Head Coach, Indianapolis Colts

peytonmanningryanleafIt also happens to be that Dungy’s former star quarterback Peyton Manning was part of one of the most well known draft debates of all time. Back in the 1998 NFL Draft it was all about who do you take #1, the safe choice with “pro-ready” skills (Manning from the University of Tennessee) or the wild card with all the upside (Ryan Leaf from Washington State). Most analysts agreed that Manning was the more mature player and should be the consensus top choice. Turn’s out they were right and then some. Manning just earned his third NFL MVP award to go along with his Super Bowl ring and Ryan Leaf, who played only 25 games in his career, has become known as one of “the biggest bust in the history of professional sports.”

Of course, each professional team has different wants and requirements, but the implementation of a standardized setting has allowed personnel directors the opportunity to systematically evaluate the upcoming draft class. Because the tests are standardized, the players are able to focus their efforts on performing well in specific areas. Obviously, there is no substitute for on-field performance, but for players coming from less-than-storied programs their performance at the combine can drastically improve their stock in the draft. The transparency of the system is what allows players to improve and provides them with instant feedback at to how they have done compared to other players.

What does this mean for the venture market? Well, consider the fact that in sports standardized tests like the 40-yard dash can be applied to all players. Coaches and scouts have a common benchmark upon which they can look at players from all over the country in a standardized way. What this system can offer is a way for scouts to filter out the over-hyped big school superstar, as well as discover that small school player with remarkable physical ability; an effective standardized measurement of a complex set of attributes. Who said football players aren’t smarter than Venture Capitalists?

Key takeaway; Don’t draft entrepreneurs with small hands? Nope. Before investing your time and money in a new innovative venture, conduct your own up close evaluation and make sure that venture’s strengths significantly outweigh its weaknesses. Wash, rinse, and repeat.

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

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homeinspectionreportNow ask yourself, would you buy a new home on a gut feeling or simply because the guy selling it says it’s a great deal? Probably not. A sensible real estate investor would probably evaluate every aspect of the property; from the foundation to the roof, the plumbing, the electrical, the lot size, the appliances, the paint, and of course the neighborhood. Even more likely, you’d probably pay for a professional home inspector (who sees thousands of homes every year) to come over, take a look, and give you a written report before you would sign the deed.

“A home inspection is perhaps the most important chapter in the home-buying process and can benefit both the buyer in understanding the condition of the house and the seller who wants to provide accurate disclosure information.” – Lynette Wyrick, PC from RE/MAX Equity Group.

Because buying a new home is most likely the single largest investment an individual will make in his or her life, it is difficult to remain completely objective and unemotional about a home that is seemingly perfect. Flaws get overlooked as judgment is affected.
hanselandgretel“Think you’ve found the home of your dreams? So did Hansel and Gretel. The fact is, every property has its dirty little secrets that only the owner knows about. In a perfect world, owners would come clean about the quirks and glitches in the old homestead when they fill out the property condition disclosure form that many states require. But as Hansel and Gretel found out, real estate is fraught with subterfuge.” – Jay MacDonald, Bankrate.com.

For accurate information, it is best to obtain an impartial, third party opinion by a professional in the field of home inspection. From a seller’s perspective, an objective inspection will provide valuable information and the opportunity to make repairs that will make the house more attractive to prospective buyers. A third-party objective inspection is therefore beneficial to both parties.

What’s interesting is that in some markets it’s standard for the seller to provide a detailed third party inspection to prospective buyers, while in other markets the buyer is the one who needs to invest in the inspection if they want to remove contingencies in their offer letter. The responsibility of who pays for the inspection tends to shift to the side of the market that has the upper hand at that particular moment. In the recent housing boom it was the sellers who got to push buyers with a “take it or leave it” attitude, today sellers are doing everything they can to make their property more attractive and they are now shouldering all sorts of costs, effort, and concessions that weren’t even on the table two years ago. What does that mean for raising investment capital? In today’s investing market the available capital is constricting while at the same time the pool of available deals is expanding. Will this shift some pressure (and costs) onto the sell side of the venture market like it has in the real estate market?

Note; one other insight that can be pulled from the real estate market is the standardization of deal documents and terms. The liquidity of real estate hinges upon the simplicity of the standardized paperwork. Just imagine the efficiencies that could be gained from standardized deal terms in early stage venture investing…

Key takeaway; neither entrepreneur nor investor are well-served by spending time and money focused on a new venture (or new home) that has bad DNA.

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

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Smart, wealthy, and very successful men and women lose billions of dollars every year investing in new ventures. Why? Recent research shows investors are often investing without first conducting their own thorough due diligence. Just how powerful is the connection between due diligence and investor returns? A recent three-year study of 539 Angel led investments conducted by the Angel Capital Education Foundation and the Kauffman Foundation, found an extraordinary correlation between due diligence and significantly greater returns.
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“Spending time on due diligence is significantly related to better outcomes…investors who spent less than the median 20 hours of due diligence and investors who spent more, shows an overall multiple difference of 5.9X for those with high due diligence compared to only 1.1X for those with low due diligence.”Returns to Angel Investors in Groups, a comprehensive study of 539 Angel led investments. Robert Wiltbank, Ph.D. and Warren Boeker, Ph.D.,11/2007


Those numbers are staggering, not only in terms of the difference thorough due diligence makes, but the fact that the median of the study was only 20 hours, and that people are actually spending less time on due diligence than that! While this seems to support both the “follow the roar” and the “trusted referral” methods for selecting investments, this amount of due diligence is far less than most people would spend researching a major purchase. If you take a step back and think about situations in which an individual is preparing to spend a significant amount of money you see in each situation a unique standardized form of due diligence, and that spending a good deal of time on them is the norm. The goal of these efforts is to reveal any potentially damaging information regarding the item to be purchased as soon as possible. Or as Richard Drake of business law firm Womble Carlyle Sandridge & Rice explains, “a thorough review of what you are buying before it’s yours is the best insurance against any unwanted surprises down the road.” sharksighted


It’s time the early-stage private equity industry takes some notes and follows the models of other industries in which thorough due diligence is the norm (real estate, automotive, and professional sports). In the next few days, we’ll be walking you through each of these industries and illustrate how conducting the proper due diligence leads to increased returns. Each example boils down to the basic, easy to remember motto: cover your ass before you spend your hard-earned cash.


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

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As you know, the North team is on a mission to accelerate the rate at which innovation gets created in this country; and that effort begins with being more transparent with and helpful to entrepreneurs. Our new paper called Breaking Through The Broken: The Transparent Guide To Overcoming The Inefficiencies In Early Stage Venture Capital has over 30+ pages of insight, inspiration, and rarefied honesty on what’s wrong with the early stage venture capital market and of course some suggestions on how we (that’d be you and North) can fix it.

The feedback has been fantastic. In just over two weeks, we’ve had thousands of entrepreneurs and investors download the guidebook. Get your own FREE copy on our website www.dontgosouth.com.

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