Today’s private equity realm is dominated by M&A, CVC, and syndicated angels interested in early-stage promising startups. A data-driven algorithmic approach is preferred by new players rather than outdated gut feeling and manual screening. Many unicorn businesses failed during the recent private equity boom, and investors had unmet expectations about technology profitability itself. Due to these facts, it became evident how difficult it was to scale up unprofitable businesses, and how vital it is to embed technology into successful business models.
One more insight was the concept of intangible assets (IAs), which turned out to be a blessing in disguise. Investing in IAs carries additional returns and holds more potential for growth in the future due to their distinctive features:
- Geographic boundaries do not limit their business applications to scale up.
- Startups can leverage IAs, generating more revenues without increasing costs.
- IAs interact with other assets in a non-additivity effect, making them synergistic assets.
- ISAs can result in "spillovers" that enable the copying of third-party ideas and processes without the risk of copyright infringement.
With the advent of the intangible revolution, market entry was lowered and startups proliferated (new startups were founded every day). It is estimated that investors spend up to 20% of their time bringing startups to the table. The statistics portray a disappointing picture of sourcing and screening: of a hundred startups selected, only one was funded. Clearly, an extensive approach has exhausted its potential, so the funnel needs to be narrowed to get startups fit for funding.
Anticipating investor preferences, PROFIT makes startups fit for funding by employing a set of tools and a hybrid intelligence approach:
Data-Driven Dossier
The data-driven Dossier is a universal repository of funding-related information, getting startups well-prepared for screening.
Robo-Fitness Validator
The Robo-Fitness Validator is a set of data intelligence algorithms to collect and process information with technology.
Intangibles Valuation
The intangibles valuation takes into account unique factors inherent in IAs.
Just-in-Time Ask
The just-in-time Ask for financing determines the minimal amount of funding to achieve key milestones.
Exit Scenarios
Exit scenarios that customize startups' predisposition to certain types of funding with effective choice of terms.
Funding Roadmap
The Funding Roadmap highlights the strong and weak points of the funding journey.
Finally, investors who partner with PROFIT receive the Startup Roadmap, summarizing 12 points of the fundraising journey along with a full Pitch Deck. Moreover, they will receive quality follow-up information for due diligence. Investors can see their preferences and terms reasonably satisfied by aligning interests with founders.
Through a well-defined process, PROFIT transforms input data into quality information for decision-making. As you shape your funding funnel, you will go from a brief presentation card to a full pitch deck and to follow-up information for due diligence.