Fundamentals of Entrepreneurial Finance by Marco Da Rin

Author:Marco Da Rin
Language: eng
Format: epub
Publisher: Oxford University Press
Published: 2019-06-15T00:00:00+00:00

8.3.5 Assessing Value-Adding Fit

We conclude the chapter by drawing some practical implications regarding the active role of investors. Consider an entrepreneur who is looking for an investor who can add value to her company. To assess how much an investor might add, one can use the MATCH questionnaire presented in Table 7.1. Here we focus specifically on questions 7, 8, and 9 about what an investor can offer. These three questions are derived from the Venture Evaluation Matrix (see Chapter 2) and were also used in Section 8.3.3. The “Customers and Markets” question (corresponding to the first column of the VE Matrix) addresses the company’s need to win over customers, gain market share, and thus generate sales. The “Technology and Operations” question, corresponding to the second column of the VE Matrix, asks how a company innovates around technology, broadly defined. It also addresses how to establish a well-functioning business model and supply chain. The “Leadership and Organization” question, corresponding to the third column of the VE Matrix, concerns the development of a leadership team, as well as the building of a functional organization with a conducive corporate culture, making the company viable for the longer term.

To answer these three questions, the first step is to take the entrepreneur’s perspective and define the areas where investor involvement is most needed. The second step is to consider a specific investor, or syndicate of investors, and ask where their capabilities lie. The third step is then to evaluate the match. We illustrate this method in WorkHorse Box 8.3.

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