Investment Focus

We invest in capital-efficient companies developing software applications, or new products that leverage existing technology. We work actively with entrepreneurs to help them validate market demand and build platforms for growth.

Capital Efficiency

We use our “3-on-3 Rule” to determine if a company is capital-efficient.

The 3-on-3 Rule states that a capital-efficient company, using less than $3 million in funding, in less than 3 years, can:

• Build a great product
• Incorporate customer feedback to improve the product
• Validate that a large market of paying customers exists

Put simply, capital-efficient companies don’t spend more than they have to. They spend just enough to develop the product to the point where its value can be validated by real customers. Once this value is validated, an early acquisition or capitalization to build route-to-market infrastructure can occur.

Platforms for Growth

Value is critical, but it has to be aligned with market forces and timing in order for significant growth to occur. Once these conditions are met, the product and its associated development team are poised for growth. It’s time to apply additional funding to build out the appropriate route-to-market infrastructure. The route-to-market infrastructure could come from an acquiring company, or could be built internally, using additional funding.

Many technology companies meet our definition for capital efficiency. Unfortunately, most of them don’t have all the pieces in place to be considered a platform for growth.

For the ones that do meet the Platforms for Growth criteria, we are committed to helping them create significant value over an accelerated time span. We infuse each company with our operational expertise, business development know-how and marketing savvy—strategically executed through our unique Reverse-Liquidity Planning process.

We tend to invest in development teams working on products related to our own areas of expertise, which are:

• Enterprise Software and Services
• Internet Applications
• Mobile Applications

The products that interest us right now are those that are software-based, or that leverage and apply technology in new ways.

Posted by Clarence Wooten & Lori Whitted on June 06, 2005
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