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| IP Advancement Labs | | Emerging Technologies: Managing the Resource Chasm
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The Capital Gap
Over the last decade the trend of venture investing has moved to favor larger and later stage opportunities, dramatically altering the capital markets landscape for early stage emerging technology companies. Ramp is launching a fresh, measured approach to take advantage of this trend - gaining early positions in unique intellectual properties that can transform markets.
Recently, investment capital markets have been allocating more funds than ever to fewer and much larger venture funds. According to data from the National Venture Capital Association (NVCA), there has been a 48 percent reduction in the number of active venture funds since 2000. Meanwhile, the Wall Street Journal reports that in the last decade the amount of capital under management has grown by over 350 percent.
Today, 80 percent of all venture capital under management is held within funds of $500 million or more in size. Professional funds operating with less than $100 million under management are now rare. Large, latter stage investments of $25 to $50 million that were unusual a decade ago are now the norm.
According to PricewaterhouseCoopers, the average venture investment in 2005 was $7.3 million. By the first quarter of 2007 it had risen to $9.0 million. This rise has created a "gap" in the capital markets.
Typically, seed stage companies can only afford to accept initial investments in the $100,000 - $2 million range. Early stage companies need operational expertise in addition to funding. These major trends in the professional capital markets along with the simultaneous death of small and operationally oriented investors have created the foundation for this opportunity. Ramp intends to specialize in making the smaller investments that young technology teams need while providing seasoned executives that are intimately focused on mentoring and guiding the underlying entrepreneurial teams toward commercial success.
In addition to the Capital Gap, Ramp has identified a Sales and Marketing gap and an Execution gap. These gaps often cripple an emerging technology company's ability to grow and create a resource chasm that becomes insurmountable without an experienced partner such as Ramp.
The Sales & Marketing Gap
Technologists and emerging technology companies apply their time and expertise on what they know and love – advancing the technology. What is missing? 1) Soliciting early customer feedback. 2) Listening to customer advice on suggested product features. 3) Exploring pricing models that capture value, not cost-plus markups. 4) Assembling reliable sales channels to reach new customers. 5) Creating a clear focus on developing predictable revenue streams.
Too often companies introduce a product only to discover that the adoption rate does not meet expectations and new features need to be added before consumers will purchase the product. Finally, the introduction of the next version does not match the expectations of customers, the company or the investors. Ramp will apply proven methods to gain customer feedback, analyze multiple markets to understand adoption opportunities, evaluate the features required, and research how to price and sell into that market.
The Execution Gap
Inexperienced managers can make poor judgments. Corner-cutting decisions that pay off in the near term may have disastrous consequences downstream. Companies that go to market without proper process and planning often find themselves unable to cope with the volume of new challenges. These mistakes are expensive in terms of time, money, and may ultimately tarnish the reputation of the company. This is called the Execution Gap and Ramp's team of experienced executives will guide investments smoothly across this gap.
Ramp's processes apply to all aspects of a company where wise planning and experience can lead to better deployment of processes, systems and capital:, product definition, technical development, integration between marketing and sales, and the installation of effective financial controls.
Without a team who knows how to enter markets and please customers, early stage companies waste time and capital. They frequently fail while trying to cross these critical gaps. Ramp's experts bring proven methodologies to help companies get it right the first time. The result is a smoother move toward higher levels of scalability, profitability, and market leadership.
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