As part of the due diligence process, we screen and analyse potential projects for suitability under the selection criteria detailed below using a combination of the following business plan fundamentals and essential characteristics:
- Founding Team The management team should consist of the key individuals that can execute and achieve the critical milestones to the next stage of funding with a passion for building robust technologies and long term value over 3-5+ years. It should ideally have a CEO that can lead the team even if the individual is not the long term CEO. In any case the team should be committed to building a company, passionate, accomplished, work well together, and be well referenced.
- Market The opportunity to build a company really starts with the attractiveness of the market opportunity. The size and growth rate are the most important metrics but there are other factors that are also important. The industry structure, barriers to entry, customer switching costs, competitive landscape, behavior of incumbents, etc. all play into the attractiveness of the market. Small markets seldom deliver the opportunity to build big companies.
- Product/Service The product or service offered should be disruptive and unique and solve a customer problem or meet a need with strong robust intellectual property rights and protection. The value propositions should be clear and the product should not require significant behavioral change on the part of the customer – represent an improvement over the current _gold standard_ in practice, suggesting market uptake of the technology will be rapid.
- Business Model The business model is the means by which you can develop profitable business in a repeatable manner – that is intuitive and compelling. While some investors will have an appetite for businesses that require large amounts of capital, Moksh does not. We prefer businesses and business models that are not capital intensive. We prefer businesses with high and sustainable gross margins. The combination of these two factors with a high growth market supports a high, internally sustainable growth rate.
- Competition The management team should appreciate the competitive landscape and understand both its present and future direct and indirect competitors. They should also have a grasp on the sustainable competitive advantage that it can build through various means.
- Exit Strategy We are focused on teams that wish to build a company that can independently thrive with a view to an IPO or disrupt with a view to M&A. We realize that most successful investor exits will be the result of M&A. However, we beleive a mangement team that has a company building mindset will achieve and attract better M&A opportunities as opposed to a single “build-it” to flip track. As an example, for Medical devices, Pharmaceutical and Health Care projects We like definable and visible regulatory, clinical and reimbursement paths.
A Word on Non-Disclosure Agreements
We respect the sensitive nature of new ideas and inventions. Our reputation is critical to our success, so we are careful not to divulge information inappropriately. However, for legal reasons, we are unable to sign non-disclosure agreements before you present your basic idea. We prefer that you send us non-confidential information at first, until we determine if there is mutual interest. If there is mutual interest and our diligence activities require signing a non-disclosure, we will work with you to assure we maintain confidentiality. For entrepreneurs who are concerned about protecting their idea, Guy Kawaski has an excellent summary of NDA’s in this article from Forbes magazine.