Investment
Criteria | Investment
Process
Investment Criteria
Our principal investment criteria are summarized below. A weakness in any single criteria need not necessarily disqualify a company from consideration.
Technology: The company has developed a proprietary, enabling technology for which it can articulate a compelling value proposition, and has demonstrated a proof-of-concept. For example, companies that have developed technology that improves the performance of the Internet will be of greater interest than service companies utilizing the Internet. Similarly, Echelon will consider an investment in devices that improve the drug discovery process, but will avoid investment in companies whose major focus is the development of specific new drugs. Technologies that management will consider include, but are not limited to, software and hardware technologies for network communications, drug discovery, medical devices, semiconductor manufacturing, alternative power, and technologies that improve manufacturing processes.
Management: It is axiomatic that investments are made in management, not products, but it is worth re-stating. A portfolio company's management team must demonstrate not just technological proficiency, but the vision and determination of an entrepreneur. A well-balanced, if not yet fully complete, team that has worked together smoothly and is capable of implementing a cogent business plan that includes a credible marketing strategy is critical.
Stage: The company should be beyond start-up (seed stage) and have demonstrated a proof of concept. We look for a compelling business model that demonstrates the business impact of innovation. Echelon, along with its advisors, will focus on value chain analysis, market entry plans, and strategic exit analysis.
Capital: The target market for investments is companies seeking $1 - 5 million of equity capital. Portfolio companies may need follow-on rounds in which Echelon Ventures may lead or just participate.
Echelon Ventures is currently not making new investments.
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Investment Process
Initial Review: All investment opportunities are centrally managed within our firm. We make every effort to respond to all opportunities as quickly as we can. Opportunities that appear to be a fit with our investment criteria are passed along in our process for assessment and due diligence.
Assessment: Our investment assessment is conducted along two "axes". The 'horizontal axis' consists of a general venture capitalist review. Is the business plan comprehensive and compelling? Is the value proposition well articulated? Is the marketing plan credible given the market, resources and projections? Is management up to the task at hand? Is there an exit? etc. The "vertical axis" includes the issues surrounding the specific technology and its industry. To evaluate these issues we enlist the support of an advisor whose experience most closely matches the technology and industry. By bringing an advisor's industry experience to bear we greatly accelerate our firm's understanding of the technology and the feasibility of the business proposition. Our advisors are selected in large part for their vision. This is very important when evaluating enabling technology that, by definition, does something that heretofore "can't be done". Our advisors frequently take our board seat, thereby providing the company with access to extensive industry experience.
Term Sheet: It is our practice to negotiate a thorough and comprehensive term sheet. It is our goal to completely avoid surprises in the closing documentation.
Participants: We will invest together with other venture firms, both as lead and participant. We have a penchant for major strategic partners. For example, we co-led with the venture subsidiary of SAIC, a $6 billion systems integrator, in our SiteScape investment.
Closing: We typically close within 60-90 days of the first introduction.