Meet America's Most Promising Companies
04.30.09, 10:00 AM ET
How promising is your young business? The world wants to know.
That's why Forbes.com is teaming with The Venture Alliance (TVA), a boutique investment adviser to early-stage companies, to identify America's most promising companies.
Many company lists are based on but a few metrics (if that many). But that's not remotely how professional investors evaluate the health and potential of any growing company. TVA has developed a scoring algorithm based on a vast range of variables that determine a company's potential--and, ultimately, its worth to investors--including: financial projections, current capitalization, market position, market opportunity, intellectual property, management team and others. TVA crunches that data (which it collects by surveying young companies) and reduces it to one "fundability score." Companies that score well, theoretically, have a better shot at raising money than those that don't.
Forbes.com will use TVA's proprietary algorithm to generate a list of America's Most Promising Companies. This list will carry true intellectual weight because it will be grounded in the kind of real-world analysis typically performed by professional investors.
We need as many entrepreneurs as possible to fill out the survey on which the list will be based. The benefit for participants is four-fold:
1) After filling out the survey, they will be given a qualitative assessment (in graphical form) of how their business stacks up to the ideal business in their industry/stage of development.
2) The act of completing the survey will force them to think a lot more critically about their business.
3) They will be under consideration to appear on the Forbes.com list of America's Most Promising Companies, as well as the opportunity to win a business consultation with a celebrity entrepreneur.
4) Upon further due diligence, the highest-scoring companies may receive a funding term sheet by TVA--a precious commodity in this credit-starved environment.
Thank you for filling out the survey. It just might be the best investment you'll ever make in this economy.
More on the 12 categories in the TVA "radar graph":
Market Opportunity: Investors tend to look for huge markets (at least $500 million) to exploit or a market that is growing at a rate far exceeding the norm (at least 10% per year).
Marketing/Sales Strategy: Investors want to see tangible evidence that the company can peddle its product or service.
Competition: Investors want a balance between having competitors (which implies that others see a similar opportunity) and a host of well-heeled challengers that could crush you.
Entrepreneurial Experience: Does the team have any experience in building or running a company? Have they paid back previous investors who took a risk on them?
Management Team: Investors look for a team with an impressive track record that leaves little doubt they can accomplish their goals.
Founder Commitment: The more time and money founders invest, the more convinced investors will be about their faith in the venture.
Directors and Advisers: Successful companies are able to attract both quality board members and advisers--not just resumes, but those who are committed to adding value to the company.
Financial Projections: Investors want to see promising--and reasonable--financial projections.
Investment Value: Investors want to understand how a company will use their money--and if that strategy has a chance of generating good returns.
Accomplishments: A catch-all bucket. One crucial element: Securing agreements with the right strategic partners that will fuel a company's growth.
Corporate Structure & Ownership: The type of corporation, location and ownership structure of a company often plays a large role in attracting investors.
Intellectual Property: Patents, trademarks and copyrights are attractive barriers to entry.
Howie Rhee, MBA
Center for Entrepreneurship and Innovation
Fuqua School of Business, Duke University
Watch our video: www.fuqua.duke.edu/wakeup
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