In which types of companies does The Grosvenor Funds like to invest?

Grosvenor's strategy is to invest in early and expansion-stage companies that have a sustainable competitive advantage, address large markets, and present a clear business plan to become cash flow positive within 18 to 24 months. On occasion, we will provide seed or very early stage financing in exceptional situations, particularly where an entrepreneur has demonstrated past success or unusual creativity.

Are there any types of businesses that The Grosvenor Funds does not consider?

We do not invest in airlines, restaurants, real estate, entertainment and retail.

What is the investment process?

The process begins when we receive your plan. Our associates read each plan and, depending on the degree to which the plan fits with our investment strategy, request a meeting with the entrepreneurs to let them pitch their idea and answer our questions. If the meeting is successful, we undertake initial due diligence and offer a term sheet that outlines the terms under which we intend to invest in the company. Prior to closing the investment we perform full due diligence to ensure the company is in good standing.

How long does the process take?

Because we are a small team we are able to reach investment decisions very quickly. The entire process including due diligence usually takes six to eight weeks.

How active is Grosvenor once an investment is made?

We take a hands-on partnership approach with our portfolio companies. After investing we become readily accessible to company officers to assist with technical issues, business strategy, recruiting and management issues, and acquisition and growth plans. Our investment professionals sit on many of the corporate boards of the companies in which we have invested. Because our team has experience in finance, marketing, and management consulting, we are able to contribute significantly to our portfolio companies’ success.

How much capital does The Grosvenor Funds commit to each company?

Our target investment for the first round in which we participate is one to two million dollars. As we frequently invest in subsequent rounds to maintain or increase our ownership position, we maintain significant follow-on capital reserves for all of our successful investments.

How should I prepare for a meeting with a Venture Capital Firm?

First, prepare a summary of your business plan that quickly outlines the most compelling reasons for investing in your company. You should be able to explain your idea in five minutes or less. PowerPoint presentations are often very helpful for conveying details about your plan. A well-structured presentation with time for questions and answers is often the best way to convey information about your company. You should also be ready to defend any of the assumptions you have made in your business plan.

You should know how much capital you require to execute your plan. Also, have an exact idea of the value of your company before an investment. This is your company’s pre-money valuation. This figure will determine the percentage of the total equity you are selling to the investors. If you already have investors, you should be able to present a thorough accounting of your company’s current capitalization including any options or warrants the company has issued.

What are the 10 most important things Grosvenor considers when deciding to invest?

Narrowly Defined Market

When defining the market opportunity, attempt to identify the size of the market you will be able to serve as narrowly as possible.

Realistic Financials

All plans should include financial projections that incorporate as much detail as possible. An assumptions section in the appendix will help investors understand your financial model.

Clear revenue model

How will the business make money? In your plan make it obvious how the company will book revenue. Will you produce a product and sell it directly or will you license your design to someone who will produce and sell it for you?

Bottom Up Sales Model

Does the plan include a "bottom up" sales model? Your plan should tell investors exactly how you intend to make your first sales. Do not rely on achieving a percentage of your target market. When ever possible articulate as many real customers who are ready to purchase your product as possible.

Milestones

Are key milestones identified? In addition to future milestones, the plan/presentation should show past accomplishments. We’re looking for a track record and a road map.

Risks

Are key risks identified? This is often the most overlooked part of a plan. Go to great lengths to convince us that you understand the risks in your market and from your competitors. Have a plan to mitigate those risks.

Strong Management Team

In addition to a CEO with great experience and charisma, venture capitalists look for a management team with depth and breadth. It is often said that investors would prefer to back a great team with a mediocre plan rather than an inexperienced team with a great plan. Your team should include members with the technical knowledge about the product or service your plan to sell as well as the operating experience gained from building a company. If there are holes in your management team, acknowledge them and show us that you are taking steps to overcome the problems.

Founder Commitment

Are the entrepreneurs willing to stake a significant portion on their personal resources into the business? It is important that the founders of the company show that they have a vested interest in the success of the company.

Respect for the Competition

Your plan should include as much information about your potential competitors as possible. Even if you have identified an entirely new market, consider the players that are likely to enter the market once you have started your business. How quickly could they imitate your product or service? Are there big players that could move into your market with resources that you can not match? Recognition of your competitors shows that you have considered the challenges that your company will face.

Sustainable Competitive Advantage

Once you identify your competition, articulate how your enterprise has an unfair advantage in your target market. Proprietary technology, intellectual property, first mover advantage, or a strong brand name may help you achieve an unfair advantage over your competition.