Venture Capital in “Non-traditional” Markets.pptVIP

After the Bust: Have the Fundamentals of Entrepreneurship Changed? FreshTracks Capital Cairn G. Cross January 26, 2002 Topics “Commercial interruption” Entrepreneurship thoughts A look back/forward at “ VT” Case study: A consummate Vermont entrepreneur Commercial interruption – FreshTracks Capital $11 MM early stage venture fund (formed 2001) $9 MM Co-investment match from Village Ventures, Inc. Focus on Vermont (2/3) 50 LPs – 60% of funding from institutions, 40% from individuals and family entities Largest private venture capital initiative ever in Vermont Entrepreneurship Thoughts What makes a good entrepreneur? Credible/honest/level headed Strong drive/work ethic Creative/flexible Realistic/optimistic (not pessimistic) Enjoys human interaction Uses resources wisely Domain expertise D VT Universe of 30 companies from 99-02 Not including significant web efforts of existing brand name VT companies Classified as either – Withered seedlings Dust heap Functioning Strongly operational D VT Withered seedlings - 6 co. ($4MM “need”) Mgt credibility? Strategic issues. E-commerce/new media skewed Dust heap - 3 co. ($7MM burned) Dysfunctional products, no compelling value prop, timing, mgt credibility (strategic/execution issues) Functional – 13 co. ($6MM inv, $20+MM “need”) 100K/yr, value prop, timing, mgt credibility, even distribution Strongly operational - 8 co. ($10MM inv, $10MM “need”) $500K/yr, skewed towards “tools”, focused on value proposition Entrepreneurial Problems of Past Few Years Too much speed not enough thought Cost to build brand and acquire customers Free does not mean useful Lottery fever and resulting greed/envy Grade inflation - “everyone is not an “A” player” and B players can’t make “A” ideas work. Case Study Lyman Wood 1910-1995, Founder of Garden Way (and several more companies) Live well on an acre of land. Garden Way eventually a $500MM company with divisions in VT, CT and Troy, NY. 1960s, 70s and 80s Garden cart Publishing company Troy