When practitioners think of the advances that have been made in supply chain management, we tend to think about people, processes, and technology. We tend to forget how important the financial community is in terms of accelerating the development of new technologies and even the wider supply chain environment we inhabit.
The Council of Supply Chain Management Professionals (CSCMP) had a roundtable on this topic. The two financial panelists were Dave Anderson, the Managing Director at Supply Chain Ventures, and David Beatson, the CEO at Ascent Advisors. Both Supply Chain Ventures and Ascent Advisors are active players in the world of supply chain management venture capital. Supply Chain Ventures is an early stage investor, Ascent Advisors is late stage.
Early stage investors, known as angel investors, are looking for companies with $100 million is exit potential. Their investment horizon is one to ten years. Their due diligence involves looking for fatal flaws in a firm’s business model or weaknesses in the executive leadership. Only 10 to 20 percent of the investments make returns above what was invested in them. Making money in this game is about the small number of firms that are paying back ten times or more what was invested in them. The exit strategy involves an Initial Public Offering (IPO), the firm going bankrupt, or best case scenario an outside investor buys the company. Being an early stage investor takes strong nerves. In the event of bankruptcy, not all that uncommon in young companies, all assets get exposed, including the assets of investors.
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