Confidence at All Time High
Results of 6th Annual Semaphore PE Industry Confidence Survey
By Mark S. DiSalvo
By Mark S. DiSalvo
Topics: Venture Capital, troubled funds, equity, private equity funds, Semaphore, funds under management, general partners, limited partners, turnaround, LP, technology, investment, market diligence, venture funds, private equity
Do you expect to make more personal compensation next year than this year? Feeling more confident or less confident in the President’s Economic team as we left government shutdown and the most recent Fiscal Cliff behind? Thoughts on your boss and competitors? Annually we ask our readers to weigh in and share their level of confidence in themselves, the economy and their businesses. Last year we heard mixed levels of confidence – did it prove to be so? Especially as the stock market soared and reported PE values were up – albeit not as high as the Dow.
Semaphore is conducting its sixth annual survey of Private Equity and Venture Capital partners, principals and professionals supporting the industry. The purpose of this survey is to gather anonymous input from our industry friends and clients with the results fully reported to all. It will stay live until mid-January.
By participating you'll get to gauge your expectations with your peers, competitors and industry colleagues. The survey will take 2-3 minutes and respondent identity will not be reported to us. Results will be published in Term Sheet and on our websitewww.sema4usa.com. Dive in.
Click here to take the survey.
Click here to see last year's results.
Semaphore (www.sema4usa.com), is a leading global professional services provider of Private Equity and Venture Capital funds under management and diligence services. Semaphore currently holds fiduciary obligations as General Partner for six Private Equity and Venture Capital funds, is a New Markets Tax Credit lender and advises General and Limited Partners as well as corporations around the world. Semaphore's corporate offices are in Boston with principal offices in New York, London and Dallas.
Topics: Venture Capital, troubled funds, Semaphore, technology
As you may have read in our last S4 Reporter, Cris Miller, the founding director of our Technology Due Diligence Practice retired last Friday September 30th. With Cris’ departure, we decided to form a Joint Venture with Topline Strategy, a Boston-based provider of strategy consulting services to technology companies, in which Topline will take over day-to-day management of the practice. It will operate under the name The Semaphore Technology Diligence Practice.
Over the last 5 years, we have formed a close partnership with Topline Strategy, working on dozens of engagements together. Together we’ve been able to provide our clients more complete answers to questions about their technologies and the markets for those technologies.
With the retirement of Cris Miller, who was the driving force behind our Technology Due Diligence practice, we thought the best way to continue our commitment to clients as well as grow the practice was through a Joint Venture with Topline Strategy. Through our long partnership, the Topline team has demonstrated a true understanding of Technology Due Diligence as well as built strong relationships with our principal technologists and major clients. Having them take the business forward was a natural. We have been working together on the creation of, and transition to this, Joint Venture for the last three months.
As part of the agreement Cris Miller will be joining Topline Strategy as an advisor and Topline Strategy will continue to work closely with our Private Equity Advisory group, providing both strategy consulting and technology due diligence services to Semaphore’s clients and portfolio companies.
As Topline Strategy will be the operating partner in our Joint Venture, going forward, please feel free to contact Jon Klein (jon@toplinestrategy.com) with any questions about Technology Diligence or visit its website www.toplinestrategy.com. Of course, you can also reach me (mdisalvo@sema4usa.com) if you have any questions. I know you join us in wishing Cris well in his retirement as Topline and Semaphore continue to fulfill our common promise and commitment to aiding investors and the M&A community with the right knowledge and correct solutions to ensure success.
Mark S. DiSalvo is the President and CEO of Sema4 Inc., dba Semaphore (www.sema4usa.com), a leading global professional services provider of Private Equity funds-under-management. Semaphore currently holds fiduciary obligations as General Partner for seven Private Equity and Venture Capital funds, is a New Markets Tax Credit lender and advises General and Limited Partners as well as corporations around the world. Semaphore’s corporate offices are in Boston with principal offices in New York and London.
Topics: Technology Assessment, due diligence, private equity funds, Semaphore, technology diligence, business advisory, technology, diligence
Next week, Apple will announce its first earnings since Steve Jobs stepped down from his role as CEO of Apple on January 15, 2011 due to health reasons. So far, the market has taken a wait and see attitude as to what it means for the company. After a relentless rise where the stock has more than tripled over the last 2 years, it has been trading in a narrow range for the last 2 months. The market is undoubtedly waiting for the next earnings report and the future guidance that comes with it to reassure them that Apple will be okay without him. Or, to confirm their fears that it won’t.
Often the market overreacts to news like this. In the end, one person rarely makes a critical difference in a company as large as Apple. But this case may be an exception. Read on to hear why…and what the implications are for other companies.
To understand Steve Jobs and his unique position, first, let’s consider the cases of some of the other technology visionaries. Starting a world-changing company is a very, very difficult feat and in our view, Bill Gates, Sergey Brin, Larry Page, Mark Zuckerberg, Larry Ellison, Michael Dell, Jeff Bezos and a few more deserve the billions that they have earned.
Yet, without diminishing their accomplishments in any way, greatness does not come from genius alone. In his book Outliers, Malcolm Gladwell makes a compelling case that timing is equally as critical to creating mega-success. Bill Gates was fortunate to have been ready when the PC was born, Jeff Bezos when the Internet first took off, and Sergey Brin and Larry Page as the Internet’s growth was making it too unwieldy for first generation search technologies to handle.
Strengthening Gladwell’s case is the fact that there are very, very few cases where companies, despite the presence of the same visionary founders, are able to replicate their initial success within an order of magnitude (or maybe even two orders).
Google is a great example. Google has probably tried harder than any other company to create new transformational innovations outside of its core business. Yet despite all the investment they’ve made in Google Mail, Google Docs, Google Books, Android, and countless other products, Google is still a one product company. Over 96% of their revenue in 2010 came from Internet advertising. The only part of the business where they have achieved leadership outside of search is YouTube, which they bought.
Microsoft is a similar story. Practically all of the company’s success can still be tied to having DOS chosen as OS of the IBM PC. In 2010, the company earned over 73% of its operating profit from the sales of the Windows OS and Office Suite. If you include the contribution of the Backoffice tools (SQL Server, Sharepoint, Exchange, etc.), which could easily be considered extensions of the Windows Server OS, that percentage goes up to 93%. Everything else – Xbox, Windows Live, Bing, MSN, etc. – contributes just 7% of the operating profit.
This brings us back to Steve Jobs and Apple. What makes Steve Jobs truly unique is that he has done it more than once on a grand scale – In 1984 with the Mac, 1995 with Pixar, 2005 with iTunes, and 2007 with the iPhone. My belief is that there are many individuals who can take what Steve Jobs has already created and take it forward. Assuming the company picks the right CEO to replace him, Apple should continue to soar on the strength of what Steve Jobs has already done. What is at risk is the next innovation that could take the company to new heights.
So what lesson should you take from Steve Jobs, Google, and Microsoft? The answer: Unless you have a Steve Jobs on your staff (not just a Bill Gates or Sergey Brin) you can't count on 'The Next Big Idea' to fuel your growth. Even if you do everything right, there is just too much uncertainty. Instead, what you should focus on is maximizing the opportunity you have. While Microsoft and Google may not have created a second transformational innovation, they made the most of the businesses they were in. They deeply understood their markets and competitors, strategically expanded into adjacent areas, made smart acquisitions, found new channels, expanded globally, and capitalized on new technologies.
In our Corporate Growth Planning practice, we work with executive teams on creating strategies to grow revenue 3x, 5x or more. While there are rarely shortages of good ideas, companies often struggle in sorting through and prioritizing them. In our experience, there seems to be a natural human reaction to pursue the 'Next Big Thing', especially in entrepreneurial companies. The real challenge is creating a disciplined and fact-based process that leverages all of the growth avenues available, not just the brightest shiniest objects.
This article was contributed by Jon Klein. Jon is the founder and general partner of The Topline Strategy Group, a strategy consulting and market research firm specializing in emerging technologies. Jon brings a unique blend of strategy consulting and hands on operating experience to The Topline Strategy Group and works closely with Semaphore on a variety of engagements.
Topics: due diligence, technology, market diligence, Corporate Growth Planning
Posted by Mark DiSalvo on Tuesday, January 25, 2011 @ 12:30PM
Is 2011 a Wasteland or Playground?
By Mark S. DiSalvo
It seems my industry colleagues have continued to be wrongly optimistic about their personal income against a backdrop of continued and decided lack of confidence in the economy and their national governments. That appears to be the clear read comparing the raw data from the 3rd annual Semaphore Confidence Survey with last year’s results.
Let’s start with pay. At the start of last year 78% of the over 500 respondents to the 2010 Confidence Survey believed they would earn more money than the prior year. The truth was that only 36% of this year’s respondents reported they did in fact earn more than the prior year. Importantly though is that only 11% of respondents earned more money two years ago against that prior year baseline, clearly signaling at least a change in how some shops are valuing their talent. This must be counterweighted by the realization that 45% earned less than last year – carry not being what it used to be. Nonetheless, not unlike last year, my colleagues firmly believe that the next year will provide the big score as nearly 75% of this year’s respondents believe they will earn more money than last year. If they are right, then next year the national deficit will be on the decline despite no increase in upper tier taxes or capital gains and the real estate market will be certain to see significant rebound.
Our peers demonstrated their personal income optimism with their LPs pocketbooks too. In the beginning of 2010, fully 98% thought they would make up to six investments. The year did not go as strong as hoped with only 11% doing six deals or more, but 76% closed 1-3 deals. Further, those deals were as large as expected with 73% self reporting their deals were in excess of $25 Million in each discrete investment when they anticipated 76% of their deals would be above $25 Million in size at the time of last year’s survey.
And in what are we investing? Unlike the year before when our respondents chose three new investment areas in the top three, the industry stayed rather consistent. Enterprise Technology and Health Care were 1 and 3 and Social/Community Technology took the second spot in that list, breaking the top 5 for the first time. Sustainable Energy/Cleantech and Gaming (not even top ten last year) were 4th and 5th. Last year the survey indicated investors were apparently smelling money and opportunity in Obama-care. As one person noted, “…when you mess with 16% of the economy something’s got to break our way.” We’ve yet to see if that comment is correct or merely hopeful but investors intend to remain active, according to our survey, in that space.
The just over 500 who did reply this year were similar to last year’s mix of VC and Buy-out pros, with a slightly higher representation of operating executives responding. One thing for sure is that this year’s mix of survey takers were very high on themselves believing that 78% (63% last year) were confident in their business and 84% (77% last year) confident in the person who sits down in front of their computer each morning. They even had increasing confidence in their bosses with 75% expressing that view - a full 25 points higher than last year and triple the year before.
This personal and professional confidence does not extend itself to America’s political leaders. While respondents were hard on President Obama and his economic team with only 36% expressing confidence in the President; it was more that triple the 11% expressed last year. His economic team did not fare as well with 49% (55% a year ago) dissing Larry Summers et al.
A 7X return is spectacular in a year but when it comes to Congress it is de minimis as its favorability improved over last year’s 0% reply of confidence in Congress to 7% with 77% (65%) stating no confidence in the folks under the Capitol Dome. Apparently it does not matter which party is in control of the Congress. State governments and state legislatures earned a doubling of confidence to 27% (you should know that the top states replying were MA, CA, NY, NJ, NC and IL). While confidence has skyrocketed for the President and crept upward, however marginally, for other pols in America, international respondents had crushingly poor opinions of their governments with fully 71% having no or little confidence in their countries leaders, more than double the 31% of a year ago. The preponderance of our international respondents were from the UK with most replies coming, in order, from Germany, Switzerland, Japan, France and China.
To see the highlights of the results of the 2011 Semaphore Confidence Survey please click here. If you want to do your own comparison, the 2010 Semaphore Confidence Survey results are here.
As usual there was a bit of entertainment offered by our none-too-shy contributors. One offered that “This was a terribly written survey,”…alas. There was the usual partisanship with strong comments about “not believing the positions the Republicans are taking” counterbalanced by charging that Obama “is a socialist with desire to make US a 3rd world country”. While there is little danger of we becoming Sweden in a hurry there were many serious comments reflecting state budget shortfalls, pension liabilities, and a belief in significant New Year investment opportunity with many industry recommendations. One notable recommendation offered was “I have never felt as strongly about the investment opportunity presented by vertical farming,” who knew?
A cottage industry has grown about the infamous response in our inaugural survey “PE is dead and I wish my boss were too.” Many wondered where “he” was and hoped he would surface. He didn’t. One survey taker suggested that “he must be serving time without access to internet.” Many have tried their hand at PE Killer’s NY Post style headline writing skills (maybe he got laid off from Wall Street in ‘08 and is now working for Murdoch?). One offered that “VC is a wasteland. PE is a playground (unless your name is Guy Hands.)” Ouch! We’ll check back next year to see what side of the seesaw we will actually experience in 2011.
Mark S. DiSalvo is the President and CEO of Sema4 Inc., dba Semaphore (www.sema4usa.com), a leading global professional services provider of Private Equity funds-under-management and technology diligence services. Semaphore currently holds fiduciary obligations as General Partner for seven Private Equity and Venture Capital funds, is a New Markets Tax Credit lender and advises General and Limited Partners as well as corporations around the world. Semaphore’s corporate offices are in Boston with principal offices in New York and London.
Topics: Venture Capital, troubled funds, equity, Semaphore, general partners, business advisory, technology, diligence, VC, investment, venture funds
Posted by Cris Miller on Thursday, September 23, 2010 @ 10:45PM
I field calls from GPs and CEOs all the time. Invariably they are doing a deal, whether investment or acquisition, and need either verification that the technology and/or markets targeted are real or a product exists and someone wishes to buy it in the future. Less often we get calls from Board of Directors. Those calls are less exact as to what the caller requires. A lot of it is because the Board member making the call carefully ensures that they have not lost confidence in the CEO (even if that is not the case) and are fulfilling independent diligence on the company itself, the markets or an acquisition opportunity.
A while ago we had a call for help from the Board of Directors of a growth stage technology company. After discussion, it was evident there was agreement that the firm needed to conduct both technology and market due diligence for their company. Initially the request was for a technology review to determine the viability of commercializing the core platform technology upon which two successful products had been built.
The CEO was a technology wizard while the Board was comprised of non-technologists and retired business people. After Semaphore’s chief technologist had reviewed the platform product’s architecture, patent and documentation, we had a review session with the CEO. The discussion immediately dropped into techno-jargon only the brightest geeks could comprehend and appreciate. The conclusion was that the product was adequate for internal use but was deficient in form and substance for outside consumption.
The CEO reviewed the findings with the Board who had market/business questions about the size of the market for such a product, the competition for such a product and the value of the product. Our market research/strategy group took the baton and came back with some interesting results that were presented directly to the Board. It was intuitively obvious to the casual observer that:
The lesson learned here was in order to get the correct answers, the Board needed to be educated to the best of its understanding. To accomplish that education, independent technical and market due diligence was necessary. The readily available technical answer alone was not sufficient since the product could have been improved. It took the market diligence, in concert with an agreed technology product plan, to make the business case not to proceed with the questioned direction.
Crispin Miller is the head of the Diligence Practice at Sema4 Inc., dba Semaphore (www.sema4usa.com), a leading global professional services provider of Technology and Marketing diligence, and Private Equity funds-under-management services. Semaphore currently holds fiduciary obligations as General Partner for seven Private Equity and Venture Capital funds, a New Markets Tax Credit lender and advises General and Limited Partners as well as corporations around the world. Semaphore’s corporate offices are in Boston with principal offices in New York and London.
Topics: Technology Assessment, due diligence, Semaphore, technology diligence, technology, diligence, investment, market diligence
Posted by Richard Gabriel on Thursday, July 29, 2010 @ 12:00PM
By Richard Gabriel
I live in Massachusetts and let’s face it; we live in what is perceived to be a high tax state. Whether this belief is true or not we share that belief of high taxes with California, New York, New Jersey and Michigan. On the other hand Florida, Texas and North Carolina, among others share a different belief and it is reflected in each states approach to funding of Life Science companies. And each of those states would kill for the concentration of Life Science, technology and educational institution that we enjoy with California and the other so called high tax states.
Sure, taxes in Massachusetts and the overall business environment for start up companies are less than ideal. There is frankly, no comparison between the incentives being offered in Florida and Texas for start up companies to move to those states and start their businesses. Some entrepreneurs have moved to these states and have taken advantage of the help, financing and favorable state environments. Each time a technology leaves Massachusetts heading for more fertile pastures, we lose jobs, tax revenues and population, which in turn decreases our real estate values, creates more stress on our commonwealth to raise taxes even more, it’s a vicious cycle and yet we sit on one of the greatest natural intellectual resources in the world and have yet to figure out how to fully mine its fountain of bubbling opportunities.
However, in my last blog, we talked about a new funding model for biotech and the life sciences industry and we received hefty responses from VC’s that were interested in exploring a new way of funding. Some ideas that we kicked around included a new ‘fund’ that would have a longer time horizon, attract a more patient and less capricious group of investment partners that weren’t demanding a 5 year exit with double digit returns per annum, but rather a combination of long term debt, mixed with long term equity investment.
How would such a fund work? Well a possible appropriate debt to equity ratio should be 1 to 4. Every dollar in long term debt at a reasonable interest rate is backed by 4 dollars in equity. This ratio, provides the limited debt partner with the interest only coverage for the life of the debt, which in Life Sciences, should be no less than 10 years. Additionally, expecting a short term double digit return on a Life Science equity investment is, frankly, ridiculous. Not only does it place an unfair burden on the entity that is being formed and its management, it is an unfair hurdle and it’s artificial to the practical operations of starting and running this type of business.
Well then, what about the risk? How is a venture fund ever to make any money? All these choices have their pluses and minuses and are self evident. For the entrepreneur, think, Steven Jobs, Michael Dell, Bill Gates and not a veteran of multiple start up companies, all of whom have, by now, failed, been swallowed or otherwise disappeared and, if alive, are headquartered in another part of the country. Perhaps the alternative though of invest big, hold, pay dividends and interest or buy back the shares at an appreciated rate that reflects the true value of the business that was built has some merit today? Take a look at the valuation gaps between a pre-clinical candidate and the sums of money paid by Pharma for Phase 2 & 3 compounds, the gap is astronomical and it is that gap that tells us or should tell us that the current model is wrong
We should be looking more carefully at the broken institution of funding our start ups in our state and instead of letting Texas, Florida, North Carolina and California pirate our technologies and people away, find a way to fund them and keep them here. Build businesses and jobs and people will start coming back to Massachusetts or perhaps they won’t even leave after they graduate! Got any ideas? Write us. We’d love to hear from you.
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Richard Gabriel is head of the Life Science practice at Sema4 Inc., dba Semaphore (www.sema4usa.com), a leading global professional services provider of Private Equity funds-under-management and technology diligence services. Semaphore currently holds fiduciary obligations as General Partner for six Private Equity and Venture Capital funds and advises General and Limited Partners as well as Corporations around the world. Semaphore’s corporate offices are in Boston with principal offices in New York and London.
Topics: Biotech, Venture Capital, entrepreneurs, equity, Semaphore, technology, Life Sciences, investment, venture funds
Posted by Jon Klein of The Topline Strategy Group on Thursday, July 14, 2010 @ 2:15PM
Blog series 4 of 4
Conducting Pipeline Interviews
There are two keys to conducting Pipeline Interviews. First, make sure to interview accounts at a variety of stages in the pipeline. The reasons why prospects don’t progress past the first meeting usually concern the fundamental fit of the product while prospects that drop out later in the pipeline typically don’t close due to issues related to value proposition. You have to conduct interviews with accounts at different stages to get the whole picture.
Second, never interview live prospects. Since they haven’t yet fallen out of the pipeline, you don’t know for sure that they aren’t going to buy. Therefore, they aren’t reliable data points as to why prospects don’t buy. In addition, the last thing you want to do is interfere with a sales opportunity.
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This article was contributed by Jon Klein. Jon is the founder and general partner of The Topline Strategy Group, a strategy consulting and market research firm specializing in emerging technologies. Jon brings a unique blend of strategy consulting and hands on operating experience to The Topline Strategy Group and works closely with Semaphore on a variety of engagements.
To read the full White Paper, please go to Semaphore News and click on the May 3, 2010 link titled - White Paper – Market Due Diligence
Topics: due diligence, technology diligence, technology, diligence, market diligence; law firms;, Pipeline Interviews
Posted by Jon Klein of The Topline Strategy Group on Thursday, June 17, 2010 @ 10:00AM
Blog Series 3 of 4
At this point, you may be thinking, "The analysis addressed the overall market size, the potential penetration of the market, and the company's likely share. Shouldn't that be enough?" Actually, it isn't. The typical due diligence process is based on the critical assumption that the accounts that have purchased a solution from the company or its competitors are fundamentally the same as accounts that have not yet purchased. Given enough time, the non-buyers will eventually buy a solution if it has a strong value proposition.
But what if that assumption is wrong? What if the accounts who haven't bought are somehow fundamentally different than the ones that already have purchased in a way that isn't obvious from segmentation factors like size or industry? If that is the case, then ‘I haven't purchased yet' becomes ‘I'm never going to purchase' and the market is far smaller than calculated. And, if the market is smaller than you calculated, the company may never reach its revenue projections.
Pipeline Interviews: Interviews with Accounts that Fell Out of the Pipeline without Making any Purchase
So how do you sort out whether or not you have an ‘I'm never going to purchase' problem? The answer is through Pipeline Interviews. Only prospects that have had sales interaction with the company but decided not to purchase anything can answer this question. They know whether their decision not to buy is primarily a timing issue or is due to something more fundamental.
Continuing with the CRM for Law Firms example, it turns out that approximately 30% of law firms with over 100 people have a fundamentally different selling model than one that is supported by a CRM. Examples include firms who primarily serve consumers and those that focus on a very narrow subspecialty and act as a subcontractor to general practices. These types of firms will never buy a CRM system since it doesn't fit their business.
In this case, the market turns out to be about 70% as large as calculated using traditional methods. We have conducted numerous due diligence projects over the years where the market turned out to be a fraction of the size originally believed, including:
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This article was contributed by Jon Klein. Jon is the founder and general partner of The Topline Strategy Group, a strategy consulting and market research firm specializing in emerging technologies. Jon brings a unique blend of strategy consulting and hands on operating experience to The Topline Strategy Group and works closely with Semaphore on a variety of engagements.
To read the full White Paper, please go to Semaphore News and click on the May 3, 2010 link titled - White Paper - Market Due Diligence
Topics: due diligence, technology diligence, technology, diligence, market diligence, Pipeline Interviews
Posted by Richard Gabriel on Friday, Feb. 12, 2010 @ 8:15AM
By Richard Gabriel
The Valley of Death for a Life Sciences company is that space, as coined by the NCI's Director of Small Business Innovation Research Programs Michael Weingarten, between a Phase 2 SBIR grant and the commercial success of the technology that is being funded and developed.
I've been there as an entrepreneur. I've been there as an advisor who helps reorganize and counsel companies. Bottom line is if management decides to follow the money and revitalize the business, the company and its shareholders will survive. I've built businesses from nothing more than purchase orders, down payments on contracts and a check book for financing. With a smart financial manager, playing the debits and credits and working the receivables and payables, a business can survive those tough economic times. Guess what; those tough times are here again! And want to know something else? Here's a surprise...your government is listening!
Here are some facts for you to chew on:
Life Science, medical device and services companies that have products for the Life Sciences Industry have a great opportunity with the National Cancer Institute's aggressive programs for Small Businesses under the STTR and SBIR programs. Just recently, I attended a conference in Boston hosted by the NCI's Michael Weingarten the Director of NCI SBIR Development Center; along with N. Stephen Ober, M.D. BU's Technology Development Executive Director, New Ventures. What was most striking about this half day of talks by companies that were hand picked to present by the NCI team and who were award winners of both Phase 1 and Phase 2 grants was the broad scope of the technologies and applications of those technologies. The Life Science technologies represented at the meeting were diagnostics, devices and drugs or as we like to say in the trade ‘D cubed'.
For those of you that don't know about these programs, STTR stands for Small Business Technology Transfer and is done with an institution, a not for profit, a university or medical center. 75% of the fund proceeds are given directly to the institution and the company is allowed to use 25% of the funds. The major focus of an STTR is to transfer important and meaningful technology from an institution into the marketplace through the participating company. The SBIR is known as a Small Business Innovation Research and a majority of these funds are available to the company. Collaboration with an institution is not mandatory.
SBIR phase 1 is up to $200,000 for a period of 6 months. Phase 2 SBIR's are for a period of 2 years and are upwards of $1.5 MM or about $750,000 per year. Most start up companies will be interested in the SBIR program as it helps fund research. If your company is lucky enough to win a Phase 1 SBIR and also a Phase 2 SBIR then your company is automatically eligible for the Bridge Award which is up to $3.0 MM over three years. These funds must include an equal amount of investment capital that will help the company through the ‘Valley of Death' where many companies have perished even though they have had successful Phase 2 programs and have been, for whatever reason, unable to secure additional funding. The NCI has obviously analyzed its own program and the success and failures of its grantees and saw this valley of death and decided to do something about it!
For all the facts go to sbir.cancer.gov and you can find out everything you ever wanted to know about the NCI and their outstanding SBIR/STTR programs.
If your business is in trouble, call someone that has been through it because your best chance for getting through the Valley of Death is to have someone who has been there and come out the other side - more than once. Getting grants, finding new capital sources that you probably haven't thought about, reorganizing your business and focusing on revenues are some of the things an entrepreneur or funding group that holds a position in an ever downward spiraling investment can do.
You can't always sell equity or take on more debt to get your business and your shareholders out of hot water. Sometimes it takes drastic measures - often painful. But if a product line survives or a revenue stream is identified, sometimes that's all you need to re-trench and re-start a fundamentally strong business. With good technology, smart road maps and proper execution you too can navigate the Valley of Death. My biggest problem as an advisor in a tough situation is "will anyone listen?" and "will the management team take action?" In these cases you need a partner that is more than just a review and a proposal; you need a team that is all about fixing problems and initiating action. One of the good things about surviving the Valley of Death is that you come out smarter, leaner, and more focused, with more promise and more certainty of success... almost worth taking the journey.
Send me an email and let me know your experience and challenges...rgabriel@sema4usa.com.
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Richard Gabriel is head of the Life Science practice at Sema4 Inc., dba Semaphore (http://www.sema4usa.com/), a leading global professional services provider of Private Equity funds-under-management and technology diligence services. Semaphore currently holds fiduciary obligations as General Partner for six Private Equity and Venture Capital funds and advises General and Limited Partners as well as Corporations around the world. Semaphore's corporate offices are in Boston with principal offices in New York and London.
Topics: Venture Capital, technology, Life Sciences, SBIR, small businesses
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