Mark Solon, one of the top Venture Capitalists located in the Rocky Mountain region of the U.S. and co-founder of Highway 12 Ventures, spent some time with us last week and just wrote his notes on OpenView in a blog post.
OpenView’s approach to investing has been to do a lot of research (on software, internet, and technology enabled business models, which is our market sector of focus), to prioritize the sectors and companies based on what we think might be the companies that are the best fit, and then to contact the companies to determine if there is a good fit. As an expansion stage firm, we also track a lot of earlier companies in the hopes that they will get to know us and be interested in taking us on as a value-add investment partner once they reach the expansion stage.
We took this approach with Balihoo, our most recent investment. In the process we met Mark, who was already an investor and board member. We hit it off with Mark instantly, and over several months our work with Mark and Balihoo has made it pretty clear to us that we are missing a great opportunity by not spending more time getting to know the regional early stage Venture Capitalists.
Mark, and our work so far at Balihoo, has convinced us at this point that the OpenView approach is an excellent fit with early stage VCs, as we are well suited to assist their (software/internet related) portfolio companies once they reach the expansion stage (Mark’s post does a good job of explaining how we have geared everything we do to help companies grow and develop through their expansion and growth stages). Also, the companies that have had great early stage backers, like Balihoo, are generally more developed companies (e.g., product management processes, go-to-market strategy and methodology, management team, board and organization and operational methodologies) than companies that have not had the benefit of great outside advice, which means that these companies should develop more quickly due to their greater capacity to incorporate our best ideas and expertise into their businesses.
In thinking back to the Venture Capital firms that we have worked with on portfolio companies over time (including Bessemer Venture Partners, Austin Ventures, Wellington Partners out of Germany, NorthCap Partners out of Copenhagen Denmark, Covington Capital Corporation out of Toronto Canada, and ABRT out of Moscow Russia), we have had a great fit with all of them and we believe that the idea of doing more investing with the regional and/or early stage Venture Capital Financing Firms makes a lot of sense.
We have not yet done a great job of getting out and networking with the early stage Venture Capital community, but Mark has inspired us to do more of this and we expect to start putting more time against this effort in 2010. It won’t change our direct approach to finding the best fit companies, but it should be another great vehicle for introductions to great companies that are a good fit with OpenView and it will be great to participate more in the community and get to know more early stage venture capitalists.