Primary problems
Sand Hill Angels is a not-for-profit organization that aims at investing in the potentially successful start-ups. Sand Hill Angels has a website with the application form for those who would like to present their start-ups. Creators of best start-ups are welcome to demonstrate their ideas in front of members of Sand Hill Angels. The primary problem of Sand Hill Angels is to define the start-up that has the greatest potential in comparison to others. The decision should be well-considered due to the several factors. First, the organization has already invested in eight follow-ons and seven new deals. The organization invests in up to fifteen projects annually. Second, Sand Hill Angels should take into account the negotiated valuation of start-ups. Thus, the amount of pre-money of previously invested objects comprised from $4 million to $7 million. Thus, the organization faces a challenge of choosing the most perspective deal.
Insights and potential decisions
Several insights from the case under consideration are pertinent to future decisions. It is necessary to pay attention to the following factors before making the final decision:
- Recent trends;
- The idea and organization of start-up and its conformity with investment criteria;
- The potential of the startup including the number of years necessary for return;
- The amount of financial resources that are left;
- Personal preferences of investors.
According to the information provided in the case study, information technology and internet dimensions are the most attractive for investments nowadays. Also, Sand Hill Angels should evaluate whether the start-up meets requirements of the investment criteria such as the founding team, market opportunities, the description of the product, business model, competition, communication, and the exit strategy (“Sand Hill Angels: to Fund or Not to Fund” 12). The amount of the target investment should not exceed $500 000. Finally, the decision-making process depends on the personal preferences and expectations of members of the organization.
Potential courses of action
Possible courses of action should include the evaluation of every presented start-up. The first start-up, Pic Collage, has particular advantages. It has been added to the top 10 iOS photo applications (“Sand Hill Angels: to Fund or Not to Fund” 8). Besides, the team comprises of highly qualified specialists who can conduct all significant aspects of business strategy. Nevertheless, there are no guarantees that the application will remain popular in the following three or five years due to the extreme competitiveness in the market.
Strengths of Liftopia.com, the second start-up, include the desire to satisfy consumers’ needs (one member belongs to the target audience and appreciates idea), the rising conversion rate, and relatively low competition. Still, there is a threat of not sufficient return and potential competition. Advantages of the third start-up, Monkey Contact, refer to the professional team and a useful product — a sidebar for Google Gmail.
Minuses include the lack of current prototype and potential customers’ concerns about privacy issues. Monkey Contact needs $400 000 to create a prototype. The strong sides of the last start-up, WebGreek, relate to the potential revenues of up to $15 million in four years with required investment of $200 000 and the proven performance after beta-version has been launched. The weak side refers to the potential growth of similar projects.
Sand Hill Angels should consider investing in Monkey Contact. This start-up will be useful for busy entrepreneurs who need clarity in their e-mails and online connections. Privacy issues can be resolved via the developed system of settings including the users’ consent to use data. The organization should also invest in WebGreek because the prototype has already proven its efficiency and the team needs only $200 000.
Works Cited
Sand Hill Angels: to Fund or Not to Fund. 2012. Web.