How should our company select a venture capital partner?
Venture capital is an expensive source of funds and you should receive much more than money in return. Horizon specializes in early stage technology investments and the Managing Directors are operating executives who have been on the boards of over 50 private companies. We always syndicate our investments with like-minded firms and provide assistance with recruiting, technical experts, prospective vendors and customers, and other service providers. Our portfolio companies are our best reference. Top
What written materials should I supply for consideration?
You do not need to have a complete business plan if you are raising capital for the first time, but a two-page executive summary which addresses our investment criteria and describes the background of the management team is a minimum, along with a description of how much money you need and for what purposes. Top
What are Horizon's criteria for investment?
Geography. Venture investing is a hands on proposition. If Horizon is to take a lead role, we want to be able to easily visit your facilities in order to assist you. Our primary focus is the seven counties surrounding the San Francisco Bay area. We will consider investments elsewhere in California, Arizona, Colorado and Oregon if we can syndicate with a strong local investor.
Management. We prefer a complete team that has relevant experience in the area of the new endeavor and has managed similar businesses in the past. Especially important is technical expertise with the product line and marketing knowlege of the focus area.
Market. Ideally, we would like to build companies that are worth over $100M. These opportunities have the best chance of entering the public market if they are number one, two or three in their field. This leads us to markets that have the potential to exceed $1B, even though they may be much smaller today.
Products. We seek differentiated products with barriers to new entrants or large suite suppliers. Commodity materials, distribution and retailing, and service companies seldom meet this test.
Investors. We respect the judgment of other investors experienced in your business area, whether individuals (angels) or other firms. If no one else is interested in your opportunity, we will probably not invest, although we do make introductions for early stage firms. Top
What information does Horizon need to schedule an appointment?
Much of our business comes from referrals from the more than 80 firms and individuals who are investors in Horizon Ventures. Trusted law firms and financial advisors also introduce us to quality opportunities, and other venture capital firms know our areas of expertise. If you do not know anyone affiliated with Horizon in order to make an introduction, be sure to check if you meet our investment criteria. We do not normally respond to unsolicited inquiries that are a gross mismatch with our investment criteria. Top
What should be included in our business plan?
In addition to addressing our investment criteria, be sure you give details on the relevant experience of your team (this could be 50% of our decision criteria), the competitive environment, the likely market size (including your source of market data), and a financial projection which shows history of the firm over the past few quarters and projects your expenses and revenues during the time frame in which the investment will be consumed. Top
Are there any sure-fire deal-killers?
We are unlikely to pursue a business that has any of the following assumptions:
There is no competition. While this can be a semantics issue, you need to understand your market better. If there is "no competition," then there is "no market."
We are only looking for a 2% share of this multi-billion dollar market. Every market can be segmented.
This market is so new, there is no experienced management on our team. But it will be a billion dollars in a few years?
We'd like to do a leveraged buyout from our current firm. Horizon is an early stage technology investor in private companies. We do not consider debt, structured buyouts, nor invest in public companies nor those of foreign registration.
We will do $200M in revenue in our 4th year with a 40% pre-tax margin. Only one company in 10,000 achieves such results. Top
How do we submit a proposal for funding?
Send us your executive summary or business plan via e-mail or U.S. mail. Click here for information about how to contact us. Top
How soon can I expect a response?
Our existing portfolio is our first priority, and each of our principals is an expert in different fields, so it may take a week or two for an initial response if you meet our criteria. Top
What happens next if Horizon is interested?
We will schedule an initial meeting and go through a process of due diligence. We will examine the resumes and references of the team, customers, other investors and technical experts in the field. We do this for about 100 opportunities per year.
If this is promising, we will have a second meeting to explore the type of investment syndicate which would appeal to you and to us, and do more in-depth research. The process of reaching terms for an investment (term sheet) can take from 3 weeks to 3 months or longer. Top
Where else can I get information related to venture capital funding?
We work with many leading law and financial institutions. Click here for a list of companies that can provide you with more information and assistance. Top
|
