MVP Overview

Strategy & Citeria

Calculated Risk

Strategy

Our strategy is to be the first institutional investor in most, if not all, of deals in which we will participate. We will look specifically for companies that have reached an inflection point in their business where a modest capital infusion and the additional support of a dedicated investor can rapidly generate substantial value.

While we are mainly focused on communications, security, and enterprise IT products and services, we feel that flexibility in our search areas is critical to the success of an early stage venture fund. Without flexibility, innovative and forward thinking, investment opportunities can be stifled, and at the expense of achieving superior investment returns.

Our investment professional’s operating, investing, and entrepreneurial experience provides critical insight into the process of building organizations for long-term success irrespective of industry. We accomplish this by helping entrepreneurs anticipate and prepare for opportunities and challenges when creating the strategic and tactical plans on which the success of their venture depends.

We are flexible and creative in our financing options, employing a mix of securities and investment structures most appropriate for the unique needs of each individual company. To accomplish this, we may begin with a seed investment as small as $250,000, building up to as much as $3,000,000 or more throughout a company’s lifecycle.

Criteria

We consistently look for companies that:

• Introduce new enabling technologies
  
• Create compelling service differentiation opportunities
  
• Markedly and quantifiably improve the efficiency of the enterprise
  
• Have the potential to be a leader and dominant provider in their respective space
  
  

More specifically, we invest in and work with companies that most closely meet our expectations regarding the following criteria.

• Management Team
  
  
• Developed Product
  
  
• Defensible Intellectual Property and Other Competitive Advantages
  
  
• Scalability
  
  
• Large Market Potential
  
  
• Capital Requirements
  
  
• Exit Strategy

Management Teams

There is no single attribute that contributes more to the success of a new company than the presence of a cohesive and dedicated management team with relevant industry experience. We look for teams that have worked together before, or have made significant progress in developing their business together prior to seeking out an institutional investor.

Additionally, previous entrepreneurial experience is always a positive factor. Even if prior ventures had limited success, a lot can be inferred about individuals who take adversity in stride, and continue to work creatively to overcome challenges.

Developed Products

Early-stage venture capital has been trending more and more towards investments in companies with developed products and early customer traction. We support this trend because it helps eliminate a substantial degree of risk in our investments. However, we also recognize that certain exceptional investment opportunities may warrant closer consideration and investment despite requiring a portion of capital for product development. In particular, certain emerging technologies will require this kind of special consideration, and MVP is fully prepared to work with companies that we determine exhibit both the vision and the skill to bring new technologies to market.

Defensible Intellectual Property and Other Competitive Advantages

A strong intellectual property position is a key element that can make an early stage company a compelling investment opportunity. Intellectual property creates a barrier to entry. More importantly, a strong patent position provides the company with an opportunity to create additional lines of business by licensing its technology. We work closely with outstanding counsel to help our portfolio companies form comprehensive strategies around their intellectual property.

Scalability

The scalability of a company’s products and services often separates those companies that are likely to achieve the accelerated growth made possible by a venture capital investment, from those that are more appropriately grown organically.

Large Market Potential

The objective of early stage venture capital investing is to earn outstanding returns. For a company to have this potential, its products and services must be targeted at significant markets. Niche opportunities, while certainly attractive, typically do not have the same upside. We look for companies that, if not defining new markets, are early entrants. We provide business development support by making introductions to potential anchor customers and strategic partners. We are able to add value to those companies that gain early traction by positioning them to become dominant players.

Capital Requirements

Early stage companies need to be properly capitalized in order to execute against their business plans. It can be problematic to have either too little or too much cash. During detailed due diligence, we work closely with management to define the size of the financing round and identify the use of proceeds. We focus on the projected cash burn rate and the corresponding runway the company will have before needing to reach breakeven or raise a follow-on financing round. It is critical that management be capable financial managers.

Exit Strategy

Because of changes in the regulatory environment for public companies, our clear preference is to invest in companies that have identified strategic acquisition by a partner, customer or competitor as the primary exit strategy.


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