When analyzing potential investments, we emphasize certain criteria discussed below. Few investment opportunities will demonstrate all of these desirable characteristics, and those characteristics will be present in varying degrees in different prospective investments.
Management - Qualified and experienced management is the most important factor in any business. Ideally, the founder(s) should be experienced in the target industry. A founder with strong entrepreneurial dedication and energy is essential. For the professional venture capitalist, the greatest amount of time and effort expended qualifying an investment is usually related to definition of the starting management team, then working through the initial business planning.
Distinctive Competence - A company should have the ability to perform exceptionally well in at least one aspect of its activity; further, that activity should be critical to success. That aspect might involve proprietary design technology, manufacturing know-how, or some other factor, such as a trade name or mark, which enables the company to compete successfully.
Market - We look principally for technology-oriented or position-advantaged companies. They should have the potential to achieve annual revenues of at least $10 to $20 million on a profitable basis within three to five years. Initial size of a market is less important than the market's rate of growth and its potential for expansion. A well-defined distribution plan for the company's products is an important requirement.
Products - We will seek companies with distinctive products, processes, or services that can dominate a niche market segment. Products used in fields comparatively free from substantial government regulation are preferred. Recurring sales to customers are also desirable.
Margins and Cash Flow - Actual or potential gross margins and/or cash flow should be large enough to permit financing of growth over an extended period of time, and produce a favorable return on invested capital.
Financial Projections - Performance projections should demonstrate that management thoroughly understands the company's business and has anticipated potentially adverse developments. Particular attention will be paid to longer-term equity financing requirements and the attendant risks for the Partnership from future dilution and over-commitment of funds. The ability to attract equity funding from other than venture capital sources is sometimes a critical factor in the success of a small company.
Location - Investments will be sought principally within the State of West Virginia. Generally, the balance of invested funds will be employed as participations with other venture capital funds actively operating in the neighboring States of Ohio, Pennsylvania, Maryland, Virginia and Kentucky, plus the District of Columbia.
Areas Avoided for Investment - As a matter of policy, we will not invest directly in real estate or the development of natural resources. We are not likely to invest in consulting or other personal service firms.
Contact Mountaineer Capital for more information at firstname.lastname@example.org