For an entrepreneur, getting our attention comes down to attracting the interest of one of the partners with a compelling opportunity couched in a well-written, thoughtful business plan. It helps if the plan comes through somebody we know and respect, but that’s not absolutely necessary. We’re pretty practical people with significant operating experience of our own, so we prefer business plans that are realistic and action-oriented to those that are hypothetical and hyperbolic. (If it isn’t clear what this means re-read and contemplate the previous sentence.)

Suggestions
We apply several quick tests to business plans we receive. Common errors include rapid growth in revenue without substantiating evidence of market adoption, or sufficient spending and hiring to support that growth. Another common error is revenues per employee that are well above average for the market sector or industry in general. Net profits consistently above 20% are highly unlikely and forecasts showing those are suspect. Research into comparable companies can provide the basis for comparing a forecast with actual results in operating businesses.

We are more likely to invest in companies that contain some or all of the following components:

• Strong management teams;
• Leadership potential in national or international markets;
• Proprietary technology, a strong market position, or both;
• Annual revenue potential of $50 million or more; and,
• Potential liquidity in three to seven years and an apparent exit strategy.
• Early stage investing often requires geographic contiguity of investors and company, but we will consider compelling opportunities outside of our home region of Northeast Ohio.