EVALUATION METHODOLOGY

Vencon's proprietary investment methodology includes its unique analysis of ventures from the standpoint of technology stage maturation. Our methodology is useful for assessing both entrepreneurial ventures and ventures inside a large corporation. The following chart describes the methodology.

Using this methodology enables VMI to assess the deal stage of a technology venture and the resultant capital required and risk profile.

Stage Zero: IDEA/CONCEPT

A new venture always starts with an idea, which by its nature, is not refined. The concept is the development of the idea into a "white paper" which is a very preliminary budget and market estimate. Sometimes, the concept activity takes months. Stage 0 is not of interest to the venture capital community.

Stage One: RESEARCH AND DEVELOPMENT

Various research and development activities are undertaken. In technology ventures, we are referring to "all" technology venture including the internet, environment, materials, and other. Stage 2 is often actively undertaken in Government laboratories, universities, and private industry. This stage has several components, sometimes known as alpha and beta testing.

Stage Two: MARKETING PLAN

After Stages 1 and 2 are completed, the capability exists to put together the semblance of a marketing plan which impacts other stages. Generally, this is the first time there is knowledge about market niches and five year forecasts.

Stage Three: FORMATION OF THE COMPANY

With many ventures, a company is formed at Stage 1. Venture spin-out of universities, Government laboratories, or companies create the legal entity at this point. Investment can only be made in a company, not technology.

Stage Four: BUSINESS TEAM AND PLAN

The most common stage of venture capital investment is Stage 4, when a business plan is prepared and a team formed. Stage 4 is usually referred to as the seed stage.

Stage Five: PARTNERING

Corporate partners provide the customer basis for verifying the business plan. Partners also provide the base of load of revenues. Vencon prefers to invest in Stage 5 ventures or later.

Stage Six: COMMERCIALIZATION

In Stage 6, the venture is generating revenues. In most cases, profitability has not yet been attained. Stage 5 is commonly referred to as an "early stage venture." Expansion Stage category ventures regard the stages of transitioning of an early stage venture into a profitable enterprise.

If you are interested in further information regarding Vencon's venture stage methodology or entrepreneurial profiling, e-mail us.