Venture Capital Investment

Leveraging Intellectual Property

Software Product to International Markets

Research and Development to Commercial Product

Venture Capital Investment

AssessIT - Information Technology Capability Assessment

Background

A Venture Capital (VC) firm with international experience in the technology sector was approached to invest in a start-up IT company with a new software product that it wanted to commercialise.

The Requirement

The VC firm had already developed a robust pre-investment due diligence process for technology businesses. However, the VC firm required an extension to its due diligence process so that it could evaluate a number of information technology risk dimensions such as entry barriers, scalability and people associated with the start-up company. The VC firm recognised it would be able to make a more informed decision by using specialist expertise. Establishing the correct condition of the company would also be crucial in setting the purchase price.

The Implementation

Hampton was engaged by the VC firm to implement AssessIT, its Information Technology Capability Assessment product. By including AssessIT in the due diligence process prior to investing, the VC firm was able to develop a wider view of the inherent risks associated with the start-up company. This project included an assessment of all business functions concerned with the software engineering practices and product management including:

  • The software engineering process
  • People management
  • Product change management
  • R&D
  • Key partners
  • Review of associated intellectual property

The Deliverables

The deliverables to the VC firm included:

The AssessIT Report, containing:

  • An executive summary
  • Commentary on six defined areas associated with software engineering practice and product management
  • The AssessIT Scorecard (central to evaluating and providing a risk weighted ranking)

A Presentation

As part of Hampton's product innovation process the VC firm was also asked to participate in a survey. The survey also enabled the client to address any specific questions about the project.

The Outcome

The VC firm decided not to proceed with the investment, based primarily on the company being too 'early stage' for investment. The decision not to invest was based on the AssessIT Scorecard risk weighted rankings across the different areas of the business and the commentary provided in the AssessIT Report that highlighted the areas of risk within the business.

© Copyright 2019. Hampton International Advisory Services. All Rights Reserved | Disclaimer