Investment Process
Evaluating Opportunities
If you choose to pursue a relationship with Telos, you’ll find us to be straightforward and responsive throughout the process. Because we perform thorough due diligence prior to making an investment, it is important that you be well prepared in order to prevent potential delays. The evaluation process is comprised of three stages.
Stage one:
The process begins when you submit an executive summary, business plan presentation, or a narrative business plan describing the investment opportunity, via email at bizplan@telosvp.com. Although not essential, it is better to be referred by someone with whom the Telos team has an existing relationship. If the opportunity appears promising, we’ll meet to learn more about your company and its plans. Additional meetings with management may be scheduled to further delve into the technology, business model, marketing plan, financial history and prospects, company operations and management skills.
Stage two:
The next step involves an extensive analysis effort to get a firm understanding of the market size and potential growth rate. The Telos team will attempt to learn more about the opportunity by talking with industry analysts, existing and prospective customers, references, and existing investors. Telos also thoroughly evaluates the product or technology, the financial and business models, and the company’s position relative to its competition.
Stage three:
The decision to invest represents the beginning of our involvement with your company, rather than the final step. We feel the best way to achieve our mutual objectives is to establish a partnership. Our commitment includes time, expertise, and capital throughout the life of our investment.
We provide constructive and candid feedback, and hope that you will find your interactions with Telos worthwhile even if we opt not to go forward.
Your Business Plan
While “business plan” is a commonly used term that lacks precise meaning, it generally takes one or more of the following forms:
- An executive summary that addresses the essential facts, assumptions, and expected financial results in a short document.
- A presentation that details all aspects of the new business and the expected financial results for three to five years.
- A narrative document, often containing many details to elaborate on the information introduced in the presentation.
- Spreadsheets that contain the financial model for the business. Content may include: revenue model assumptions, headcount growth profiles, capital expenditure plans, and a cash flow forecast.
At Telos, we choose not to enforce any rigid rules as to what forms of business plans are (or are not) acceptable. However, we do aim to be efficient and thorough when evaluating investment opportunities. As a first step, we prefer that you submit an executive summary.
Submit Business Plan >>
When we’re impressed with your executive summary and interested in learning more, we will contact you to arrange a meeting. The meeting is your chance to give a presentation detailing the company’s business plan. It is our hope that you will provide answers to all—or the majority of—the following questions:
The Team
- Does the team have relevant technical and business experience?
- Can the CEO and the other team members attract “A” players to join the team?
- Will the team provide a good balance between cohesiveness and creative tension?
- What gaps exist in the management team and when must they be filled?
- Does the team suffer from the “Field of Dreams” syndrome (build it and they will come)?
- Is there a visceral understanding of the importance of customer input in guiding product development?
- Does the team understand the importance of business focus, how will they achieve it in the business plan?
- Indicate team members with outstanding industry experience or achievements.
- Is the team prepared to build a successful company?
Technology & Products
- Is there unique technology behind the product ideas?
- Do patent filings protect the technology or is there an intellectual property protection plan?
- What kinds of barriers exist, or can be erected, to protect the technology and its application in products?
- Is there a product roadmap and, if so, what is the rationale behind it?
- How are the specifications for new products defined?
- What methods are used to create and monitor product development schedules?
- Is the product release process schedule or feature driven?
- Is the task breakdown in the product development schedule sufficiently granular to provide “early warning” to management about significant schedule problems?
Market Engagement
- What method was used to estimate the served market size and growth rate, and how realistic is it?
- Is the market size and growth rate adequate to support the company’s revenue growth plans?
- What is the current and expected future competitive environment?
- Do the company’s products address an existing market or must a new market emerge for the company to be successful?
- Is the value proposition strong enough to cause customers to adopt the product?
- Do the target customers need to change their behavior in some significant way?
- Will the company engage with customers directly or through channel partners?
- Has the company done enough market segmentation analysis to identify the appropriate target market segments and the order of attack?
- Are there hundreds of target customers or only a handful?
Business Model & Financial Plan
- Is the modeling of the revenue plan realistic?
- Is the hiring ramp for new employees achievable?
- Is the organization structure logical? How will it evolve over the ensuing two years?
- Have all the normal categories of business expense been included in the plan?
- How exactly will the company make money?
- Is the “business model” realistic and proven by existing successful private or public companies?
- How much capital is needed to reach break-even?
- Is the amount of required capital comparable to the amount consumed by similar companies?
- How many funding rounds are being considered and are the valuation expectations reasonable?
Submit Business Plan >>
