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As
a seed-stage and early-stage investor, we see many great ideas from
the best and brightest entrepreneurs. Often, we evaluate opportunities
that are no more than a passionate entrepreneur with a great idea.
At times, this makes our job challenging. It is difficult to evaluate
a technology when there is no product, as well as determine market
size and market adoption/timing when there is no customer. However,
this is also what makes our job fun and exciting. Overcoming this
challenge is the genesis for our investment philosophy--to be an
active investor, providing more than capital and board participation.
We use an execution-focused approach in working beside management
to help build sustainable technology businesses, combining relevant
industry experience and capital as appropriate to guide our portfolio
companies to success.
There are a few core principles that guide us as we evaluate a wide
range of investment opportunities. While each situation requires
different tactical maneuvers, the following exemplify of our thought
process:
Independent thinking.
To find “nuggets of gold” in technology deals, we work
to form a balanced, but sometimes contrarian, view. For example,
there is often a debate on the viability of a proprietary technology
versus a standards-based technology. At times, we have discovered
that the “standard” has been touted as a wonder drug
that covers a multitude of applications. Inevitably, this is going
to disappoint some, if not all, of the target markets, so we would
not necessarily rule out all business plans deemed to provide a
“proprietary” solution in the same space. In these situations,
new technology may actually have a great chance of succeeding in
the right niche and could become the de-facto standard.
Wise, discerning choices.
To avoid becoming victims of herd-mentality, we are careful with
not only where we invest, but also where we do not invest. We expend
a significant amount of time and effort in discerning “hype”
from a true trend that can create a disruption in the marketplace.
When a technology gains notoriety, for example, we are more interested
in the science underlying the technology then the hype around market
size. Essentially, if a technology does not meet market requirements,
it will fail—despite the market opportunities.
Respect for leaders.
The ultimate success of a company is determined by its management—especially
in an environment that is highly competitive and experiencing a
rapid pace of innovation. While venture capitalists, advisors and
board members can influence the direction of the company, it is
management’s responsibility to demonstrate leadership—and
we support their efforts. With a keen eye for effective leaders,
we see a strong portfolio management team as a key criterion for
success. The team must understand the risk, implement the strategy
and operating plan to mitigate risk and, actively, steer the company
in the right direction when things veer off course, as they inevitably
will in any start-up. Respectful of our portfolio leaders, we are
here to support, not control, initiatives.
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