Government Technology Investor - US Air Force Research Lab
Challenge. The USAF is among the world's largest early-stage technology investors, investing over $3.2 billion each year in over 2000 projects. It conducted two studies to explore the feasibility of utilizing best-practices from the venture capital industry to further it's goals.
One goal is to accelerate what they call "Technology Transition," a multi-billlion dollar issue that affects thousands of programs across DoD.
Air Force Research Laboratory (AFRL) executive management commissioned VenLogic to explore how Venture Capital (VC) Best Practices can facilitate technology transition from AFRL labs to the battlefield and/or to civilian commercial products. The study had 3 goals:
a) Document a “top level checklist” of VC Best Practices,
b) Conduct a demonstration of these tools working with a seasoned AFRL program management team, and
c) Develop business case recommendations for feedback and possible program approval across AFRL.
Solutions. This 9-month effort resulted in too many findings to list here, far exceeding the original expectations for the project. The application of the several proprietary tools identified the following issues limiting or preventing successful technology transition:
• Identified AFRL Business Model Diagram Omission
• Identified AFRL Brand Positioning Gaps
• Articulated Product Management Organizational Gaps
• Articulated the Technology Transition Gap
• Identified Key Issues in the DOD 5000 Specifications
• Articulated TTP and S&T Plan Gaps
• Conducted Business Plan Analysis on Industry Partner
• Outlined solutions typically provide by venture managers.
Results. Results have been escalated to the Pentagon executives who have jurisdiction over these issues for all of DoD. Unclassified results were presented at a venture industry conference and are now available as a DVD product - Venture Assessment Tools - Part 2. One noteworthy development was the successful, simplified translation of VC to DoD best practices. This resulted in a new class of DoD Compatible venture assessment tools are now available for program managers to solve important Technology Transition problems.
Robert Kruse has since been invited to present to DoD conferences in 2006.
While results were successful, government policy is to decline requests for contractor endorsements.
VenLogic was engaged for additional consulting and speaking opportunities.
Corporate Venture Fund Startup
Challenge. Bechtel Enterprises had a mission to develop a new Telecom Venture Development
company. VenLogic consulting team members included former telecom executives
who had several IPOs to their credit. VenLogic was engaged to provide consulting
services in the business plan development of the new venture fund. The business
plan required the develolpment of a sophisticated
portfolio model which could demonstrate the fund returns to Bechtel, the
Solution. VenLogic had 8 weeks to design a model that was successfully used to build
the business case for Incepta Ventures. The custom 10-year financial model handled 60 investments in 4 deal types (wireless,
long haul fiber, CLECs, and others), across 4 funding rounds (series A, B, C
and IPO), with considerations for Senior Debt and dynamic share price calculations
using macros. The model integrated 5 valuation methods with carried interest
payouts for general and limited partners, including holdbacks and interest earned.
The model had to compliment the fund's business process to estimate man-hours
for screening deals through due diligence (pre-money), and post-money venture
management through exit.
Results. Bechtel commited to invest up to $500M into their corporate venture fund subsidiary, Incepta Ventures.
GE Capital participated in the fund afterwards. (San Francisco Newspaper Article)
General Partner Endorsement:
"Your participation held great value
during the critical launch phase and are proficient in financial engineering,
especially given the sophistication of our investment targets. Your many hours
invested with our senior team were key to our success in attracting Bechtel
John DeFeo, President & CEO
Incepta Ventures L.L.C.
- Former CEO, US West New Vector
Telecom Startup - Venture Assessment Program
Challenge. The executive team of a telecom startup, MidNet
Inc., was seeking a venture assessment program to rapidly bring their team
into focus on the core issues of importance to venture investors in advance
of their roadshow.
Solution. VenLogic designed a private 3 day venture assessment program on Sand Hill Road
in Menlo Park to the company's specifications. The audience involved number
of Silicon Valley private equity investors and blue chip partners, including
NASDAQ Insurance, Morgan Stanley, Gray Cary Ware & Friedenrich, Zurich Scudder,
Venture Analytics and many others.
Results. The company left with an expert
review that provided real-time analysis, strategy, feedback and recommendations for their deal. The
findings were documented into a 30 page report. The team also left with
valuable personal relastionships among some leading Silicon Valley insiders,
one of whom became a candidate member of their board of directors. (Program Photos)
"Best two-and-a-half days in my entire work history and I’m 58 years
old! It’s like a language school – to learn the right language to
talk to investors. We got some very nice emails from potential board members
following the program and are on our way to engaging one of them.”
- Peter Fentiman, CEO MidNet Inc.
"This program saved us millions! Very practical and very applied. The program
is about what makes ventures and venture financing successful. Who wouldn’t
want to get back to that playful and experimental environment where you can
try on ideas safely? This is the best educational program for startups."
- Ruedi Aschwanden, CTO MidNet Inc.
Corporate Business Case Development
Challenge. The CEO of Multiple Zones, a $400M public company [NASDAQ: MZON] needed
to develop the business case for a new internet-based spinout fast. The firm had previously
engaged several consultants over a 3 month timeframe with little success in
developing a venture quality package.
Solution. In only 4 weeks, VenLogic interviewed management and developed the business
plan with best-practices industry research. VenLogic also developed a sophisticated
financial model which simulated a catalogue based demand driver, three tier
call center, product mix for over 10 products, shareholder and valuation models.
Results. The results were summarized into board presentation which the CEO successfully
used in negotiations.
"Your significant knowledge base, research tools, and experience in analyzing and developing (ecommerce) business models of this nature
were essential for meeting the tight deadline in only 4 weeks. Your writing and financial modeling skills freed my executive time and your superb
understanding of the venture capital process enabled this plan to be clearly communicated in investor language."
CEO, Multiple Zones Inc.