Roser Ventures' investment philosophy is based on the common goal of achieving long-term superior returns. The Principals have made substantial personal investments into the Partnerships as limited partners. Serving as co-investors, we share the same return objective with our limited partners. Serving as equity investors, the management of our portfolio companies and the partners share the same desire for return on equity.
People are the key to a successful investment in a portfolio company. It is the people that work together who will achieve long-term returns, a business cannot function without them. A company must have the management ability to convert an opportunity into a successful business. In addition, a company must have the potential to achieve a strong market position based on either a proprietary technology or leadership position in its industry and market.
In order to achieve superior returns, niches are identified to provide opportunities for investment in inefficiently valued companies.
The following investment strategy is executed by the Partnerships:
· Management is the key to developing successful ventures. Companies must have the entrepreneurial and managerial ability to convert a technology or product opportunity into a successful business in a position of industry leadership. Management teams may need to be supplemented and strengthened over time in order to keep the company successful and on top. However, the Partnerships will not invest in companies that need immediate substitutions of management. Additionally, portfolio company management must share the ultimate goal of return on investment by having a significant equity commitment within the company.
· A portfolio company must demonstrate the capability to achieve a strong market position based on either proprietary technology or industry leadership. Industries that are small or have limited market growth potential are considered only if a company has achieved or has the capability to achieve a dominant market position. On the other hand, when an industry is large or exhibits strong market growth, a company must have proprietary technology to enable it to take market share. Consideration will not be given to companies that have a technology "looking for a market." This includes companies with a strong technology but no revenue expectations within an eighteen-month period. The Partnerships will invest in companies with a product either close to, or in a sales cycle, so long as the market has not been fully exploited. These are the companies in which technology enhancements, added sales and marketing, and additional financial support can strengthen their market position.
· Liquidity is a paramount consideration in making an investment. Roser Ventures' time horizon for exit is three to seven years. Investment deals are structured with the expectation of liquidity being achieved through a public offering, a merger or an acquisition, or a refinancing/cash flow scenario. Liquidity realizes the return on investment; diligence, time, and patience create the value in that investment.
· Each potential investment is evaluated on the basis of its expected return on investment (ROI) and its level of risk. In constructing portfolios of companies with differing ROI expectations and risk levels, the Partnerships seek to achieve an overall return of over 30%, assuming a mix of successful and unsuccessful deals.
· Roser Ventures targets a niche in the venture capital industry. The amount of capital under management in the venture industry has been increasing along with the corresponding size of individual investments. Since 1980, the average fund has grown from $42.9 million to $153.9 million under management. As a result, venture capitalists are deploying larger amounts of capital to each deal. This has created more competition for the larger deals and higher company valuations. The public markets and the new issue markets, in particular, have been "hot," creating strong short-term returns. Such results are not sustainable and the resulting overvaluation will most likely subside. Higher and more consistent returns should occur in smaller, less overvalued opportunities, particularly when combined with a long-term perspective. Roser Ventures focuses on deals that may not suit larger venture funds. It participates in $1-10 million deals in which the Partnerships will invest $100,000 to $3,000,000.
In addition, the venture industry does not have a strong base in the Rocky Mountain region. Currently, the demand for funds is greater than the capital available. This is particularly true for early-stage companies. Investments by venture capital firms located in Colorado represent less than 25% of the money invested in the state. This creates opportunities for the Partnerships to focus on companies located in Colorado and the Rocky Mountain region.
· A strong network is maintained with limited partners, advisors, and prior portfolio companies. This network helps in discovering, developing, evaluating, adding value to, and realizing returns on new investments. These relationships are also important resources for co-investment, ongoing monitoring, and potential board participation. A strong network of venture capital professionals is especially helpful in fulfilling the investment needs for portfolio companies through syndication, co-investment, and follow-on investment. The Partnerships have co-invested with numerous firms including Advent International, Ampersand Ventures, APV International, Boulder Ventures, Centennial Ventures, First Analysis, Forefront Capital, Pequot Ventures, Needham Capital Partners, Sevin Rosen, Solstice Capital, Technology Funding Inc. and US Venture Partners. Relationships with the "big six" accounting firms, law firms, banks, and underwriting firms round out this network.
©2002 Roser Ventures, LLC