Investment Criteria
Sector Focus
Velocity seeks investment opportunities
in primarily the following sectors:
- Information Technology, including:
- Enterprise Software and Infrastructure
- Communications Infrastructure
- Wireless Applications
- Niche Vertical Software Applications
- Manufacturing Technologies, including:
- Silicon and hardware based technologies
- Sensors and process controls
- Applications of technologies to manufacturing
processes and industrial products
While Velocity participates in
venture financings of all sizes and
stages, the firm's specialty is investing
in opportunities in the "Capital Gap."
In general, this includes companies
seeking to raise between $1 million and $5
million. Velocity frequently seeks to
become involved with a business in the
earlier stages where the current capital
need is less than the $10M+ average deal
size of larger venture firms. Velocity
believes that the best opportunities for
Velocity and for the entrepreneur as well
as management are those that can get to
exit on less than $10-15M of total
capital investment.
Defensible Advantages
Velocity seeks business opportunities
with proprietary defensible advantages,
including intellectual property.
Business Criteria
Realistic Growth and Obtainable Profitability
An important part of Velocity's
investment analysis includes assessing
the management team's ability to achieve
their projected sales and earnings
targets. Velocity invests in companies
with obtainable plans for revenue growth
and credible plans for achieving
profitability. Companies that meet
projected revenue targets and obtain
profitability will have more exit options
available to them.
Financial Criteria - Revenues and Capitalization
Velocity considers the following to be
important financial criteria that must be
demonstrated before Velocity considers an
investment in a potential portfolio
company:
- The company must have the
potential to achieve annual
revenues of $30 million within 5
years and show at least 100% year-to-year
revenue growth for at least the
first three years.
- While Velocity occasionally
invests in company's that have
not yet begun recognizing
revenue, companies should
generally either be recognizing
revenue or be on the verge of
recognizing revenue(via an
imminent product introduction,
etc.). Velocity considers
technology that can be validated
and prefers opportunities where
customers and/or prospects can be
identified and contacted as part
of the due diligence process.
Management Must be Flexible,
Experienced and Strategically Oriented
The management team should have relevant
experience, a track record of
accomplishment, and be willing to work
with Velocity to maximize the success of
the company. Particular qualifications
and skills Velocity looks for in a
management team include:
- The team must show the ability to
act on and react to market input
and when necessary proactively
diverge from the original
business plan and quickly develop
new plans as the marketplace and
assumptions change.
- The Management Team must be
looking for a strategic
relationship with its investors.
Velocity intends to add value
through means other than just
capital, and thus, is not
interested in financing companies
that are seeking only money from
its investors.
Geography
Velocity invests primarily in the New
England, New York and Washington D.C.
corridor.
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