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Posts Tagged ‘PE Firms’

CoolChip Technology Benefits from ZENeSYS Competitive Landscape Analysis Methodology

September 23, 2011 Leave a comment

On August 20th and 21st, 32 future management consultants from top Business Schools in India participated in a ZENeSYS Boot Camp. The objective of the  boot camp was to learn ZENeSYS Competitive Landscape Methodology and write the best analysis for CoolChip Technologies.

Winner of MIT clean energy award and recipient of a DARPA grant, CoolChip Technologies has perfected its patented technology for rapid heat removal from high performance computer chips. They are now ready for its next level of growth.

The participants in the Boot Camp were tasked with using the ZENeSYS Competitive Landscape Analysis (CLA) methodology to provide an unbiased assessment of CoolChip’s product features as compared to its competitors. Three teams from Boot Camp submitted their analysis in the final round which prompted the following response from William Sanchez CEO of CoolChip Technologies.

“We had the opportunity to benefit from their novel methodology for competitive landscaping. The ZENeSYS analysis will be very useful for CoolChip’s next stage of growth as we seek our next round of financing. In-depth understanding of the competitive landscape is curial for positioning our company. The ZENeSYS systematic framework provides a clear, concise mulch-dimensional presentation of the competitive landscape. The tool is a priceless piece of machinery for processing unwieldy amounts of information. The rapid report generation and high standard of quality make the market intelligence very valuable and a resource CoolChip will continue to use as we explore new market verticals and require comprehensive analysis on incumbents and new entrants.”

About ZENeSYS Competitive Landscape Analysis (CLA): A methodology that has been perfected over two years to get the most up-to-date snapshot of market conditions as it relates to a client’s specific product or service. The methodology uses a framework based on competitor goals and customer’s preferences to synthesize news, blogs, forums, white papers, patents, press releases, testimonials, product literature, industry reports, books, and journals to identify best practices and opportunity areas. Startups develop insights for growth and investors get an unbiased assessment of investment risk.

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A unique strategy by a Digital Media PE fund

February 12, 2011 Leave a comment

Buyout PE funds are at an all time high since year 2005. Despite this, the amount of “dry powder” or unallocated committed capital in the buyout funds is above 50% for the last three years according to AARMCORP who track and benchmark PE funds . Too much money chasing not-so-plenty a deals.

Furthermore, a peer set comparison of buyout funds shows that funds under 500M in assets who are investing in Technology and Communications buyouts have reported less than 10% IRR in the last three years. Despite these two negative indicators, there is unabated interest in technology buyout funds due to the promise of high returns in a relatively short term.

The good news is that it can still happen. Provided, there is a capable management team with the right connections, a smart deal identification mechanism, a creative makeover process, and secured exit planning. Enter Michael Connolly and David Silver of Atlas Digital Media Opportunity Fund who have what it takes to take on the challenge in delivering the heady 40% IRR limited partners expect.

Their highly successful deals EldercareLink, BuyerZone, Big City Doctors, Med Trak Alert and Atehena East, has given them a rich ecosystem of deal selection expertise. They have already identified two Internet properties with interested buyers as suitable target firms. Zane Tarrence, an adviser to the Fund, maintains a large database of potential buyers and together with the Managing Partners who have relationships with both strategic and financial buyers; for example, QuinStreet, Internet Brands, The Health Central Network, and BankRate among many others. In all cases their criteria is to seek out fragmented private companies at a discount to their multiple much higher than what other private or financial buyers would pay.

Unlike other funds, Atlas Digital will examine potential investments with an emphasis on who the potential buyers of the portfolio company will likely be prior to the Fund acquiring a controlling interest so there is no delays in cashing out in a timely manner. The partners management consulting backgrounds has been instrumental in creating valuable “reusable know-how” from re-restructuring Internet property deals such as ElderCare Link and Big City Doctors.

Applying tried and tested methodologies to fix Internet properties gives them an edge over others who are failing to derive efficiencies in their asset management operations. This is a significant edge for Atlas over other funds of similar size. Not only are they able to make more deals but they can also manage them with a lower operating cost.

There are hundreds of Internet businesses with a value just below the transaction size threshold of what strategic buyers are looking to buy, leaving an opportunity for Atlas Digital to identify, acquire, restructure and exit by leveraging their connections, methodologies and pre-appointed exit deals. Email mic@atlasdigitalpartners.com for more information.

Both, Atlas Digital Partners and AARMCORP are past clients of ZENeSYS.

Economizing Data Analytics – Private Equity Portfolio Optimization Case Study

January 24, 2011 2 comments

This was sent out in a recent ZENeSYS newsletter…

Up until now sophisticated analysis of data was the privilege of large institutional fund managers. Now technology and the Internet has leveled the playing field. Here is a case study on how this is taking place.

ZENeSYS has teamed up with AARMCORP to develop a platform that investors in Private Equity funds can use. Our first solution will be an implementation of Mean Variance Optimization algorithm on a PE fund  portfolio.

Balancing Act

This algorithm will allow investors to test their portfolios for maximizing returns. By making a peer group comparison of each new potential investment, the algorithm will make a call on whether to go ahead with that investment or not.

The determination will be made on whether the new fund is in the top percentile of its peers in terms of historical returns and whether it diversifies the risk in the target portfolio or not.

Fund managers will realize that this is nothing but an implementation of Markowitz’s theory of portfolio optimization. However, to be able to find all peer groups, make a comparison and test the diversity is not a trivial task even after assuming that all the comparison data were available to start with!

So how can it be done in an affordable manner? The answer lies in a shared platform that can be accessed over the Internet to run this algorithm using AARMCORP’s exhaustive database of PE fund performance data.

The sheer scalability of this solution reduces the cost of running each test for the price of a standard analyst report.

Image credits to Pete Ellis

Lack of early insights in startups impairs profitability

January 24, 2011 Leave a comment

Here is a Startup conundrum. “If startups knew today what they will find out five years later, they would reach profitability sooner”. If we plot a curve for two key indicators – operational cost factor (OCF) and clarity of vision (COV), it would look like this.

Improving efficiency with clairty of vision

At inception, the operational cost factor is high. Startups could be spending money on wrong things as the clarity of vision is poor. As clarity of vision improves slowly – mostly by trial and error, they become more efficient and cost of operations start to go down.

What can be done to improve this? The answer is simple. Study the market, take an objective view and make the necessary changes. This rarely happens because founders have a hard time justifying the money for market researchers and strategic advisers.

Are there are any recent founders out there listening, let us know what we need to do to convince you!