Funding

01.04.2019 / 08:04

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SMART MONEY: What makes your Fund different?

In an overcrowded startup ecosystem where only a 40% of small businesses are profitable, 30% break-even, and 30% loose money*, it is important to signal the value of know-how as a key factor for Venture Capital firms. Thanks to our 18 years of experience working with entry-players we have uncovered how to maximize smart money, thus allowing us to minimize the risk and maximize the potential for success of our VC Partners.

"Being smart” is tied to valuing know-how when aiming for a startup's success; lack of product-market fit, limited cash flows, team discrepancies and disharmony, poor management of competition, poor marketing or failing to understand the requirement for geographical expansion are limiting factors that can be reduced by establishing effective proceedings, ultimately ensuring that know-how is developed and maintained in the VC-startup relationship.

Such proceeding should include a scouting and assessment phase, a sales and business development strategy, the possibility of utilizing value-added services and the right strategic alliances’ to co-investment opportunities.

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How does an effective proceeding look like? Scouting & Assessment

It is crucial to scout for disruptive technologies & start-ups that are aligned with VCs philosophy and provide an assessment while aiming for a low-risk reward ratio investment.

Firstly, the scouting stage should have a custom-made proactive approach, in which team expertise must be leveraged, disruptive technologies recognized across sectors and effective identification of potential investment opportunities allowed. This results in an increased success rate.Secondly, the assessment stage must act as a complement to the internal due diligence process.

It is the moment to compile a preliminary commercial analysis for target territories (SWOT analysis); an early stage opportunity pipeline with an overview of the potential volume and ROI estimate; and lastly solid market entry research including: market positioning and potential, market entry success rate estimation, sector and industry research, and customer and competitor analysis. This will result in a clear value proposition that can be aligned to corporate insights from potential customers and from direct or indirect sales channels.

Thirdly, the scouting & assessment phase must collude into a startup validation and risk assessment report. An audit of the management team skills audit and a business plan viability assessment complemented with a PESTEL analysis and a diversification strategy.

Sales & Business Development

A competitive account entry strategy matched with sales acceleration services is proved to reduce time-to-market entry – and market entry timing matters! This is where one can add significant value to your portfolio startups.

An effective sales and business development plan should at the beginning include market research on market validation, identifying valuable emerging markets, and a competitive landscape analysis. Afterwards, an account entry strategy where the right accounts are defined, the product strategic fit is analyzed, and the buying centre within the account is defined and captured. Then, the creation of an aligned marketing strategy is crucial to handle communication channels, public relations, crisis prevention and events as well as roadshows.

Along the same line, a solid sales execution is relevant; our methodology is based on the Winning Complex SalesTM program, in which the full sales cycle is based on establishing relationship with targets, managing different decision makers at the same time, creating value to the stakeholders closing deals, integrating and reporting on sales. In addition, a customized sales pitch should transform the offer into measurable business outcomes, define its competitive advantage, and showcase a tailored value proposition.

Finally, an account management strategy should be created, to keep building or maintaining the relationship with startups and new accounts, advising on the long-term growth strategy, and handling account renewals and upsales.

Value Added Services & Co-investment

In our case, our value-added services grant our clients access to our broad Technology Ecosystem therefore enhancing the VCs’ value proposition and producing differentiation characteristics from other VCs. In addition, through our extended network, we provide co-investment opportunities while assisting in risk diversification, reaching expected-desired fund size, and possible exit strategies. This know-how ultimate consolidates the notion of smart money.

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