Venture investment has always been risky, but in a world where assets traditionally viewed as 'safe' are imploding all around us, the risk in start-up companies hasn't increased substantially
Phoenix, AZ (PRWEB) February 19, 2009
For start-up companies vying for increasingly scarce venture dollars, talk is cheap. According to AKF Partners, a boutique advisory services firm that works primarily with hyper-growth start-ups, many of which have recently secured early-stage financing, VCs will not seriously consider an investment in any business that cannot demonstrate a quick and viable path to profitability.
"Venture investment has always been risky, but in a world where assets traditionally viewed as 'safe' are imploding all around us, the risk in start-up companies hasn't increased substantially," says Kevin Fortuna, a partner with AKF. "Venture capitalists, just like everyone else, are belt-tightening in this environment, but they are still on the hunt for great ideas and great management teams, and they are pulling the trigger if the deal is right."
So what are the venture firms looking for? "Professional investors want to see a great idea, a great team--one with a track record for building shareholder value--and, above all else, they want to see that the company is executing on a plan that will quickly lead to profitability and scale," continues Fortuna. "In particular, investors want to see that a technology platform can scale well past the point of profitability. Our clients recognize that, so they're attracting venture investments while others are failing."
In the past month alone, three clients of AKF Partners, Outbrain, Achieve CCA, and Snooth, have secured early-stage venture financing. In its role as a key advisor and partner, AKF is helping these and other hyper-growth companies align their strategy and operations and get the right financial backing, so they can succeed in today's challenging environment.
Snooth.com, the world's largest wine site, which grew 400 percent last year and has more than 500,000 unique visitors a month and over two million reviews, has been working with AKF Partners as a key advisor.
"When we started, we had great organic growth and all the traffic we could handle," said Philip James, Founder and CEO of Snooth.com. "But when we needed to take the company to the next level, we turned to AKF Partners. Kevin Fortuna at AKF Partners had the established contacts to get to the right people at the right level, and his advice on strategy and positioning has been invaluable. It's also great to have access to AKF's unbeatable technical and scalability expertise."
"Today isn't necessarily a bad time to be starting a company. During the last deep recession in the 1970s, companies like Microsoft, Fed-Ex and Costco were started. But you need to get the wheels turning and show that the model is working before venture firms will be giving you money to expand," sums up Fortuna.
The key to managing through this downturn is focus, hard work, and capital. After a certain point, if a company has the right ingredients, then survival will pay off.
About AKF Partners
AKF Partners is a boutique advisory firm that specializes in technology and corporate strategy. The four partners of AKF draw on nearly 75 years of combined experience as former executives at Fortune 100 and start-up companies to advise companies on areas as diverse as network scalability and availability, technical operations, personnel, organizational process, and all facets of business and corporate development. Visit http://www.akfpartners.com for more information.