Portfolio Company Operational Oversight

Given the ever-changing conditions that time and again are disproving the old maxims that worked in earlier times, today’s investor needs an effective tool in his arsenal for success – Investor-sponsored Operational Oversight – to assist entrepreneurs and investors maintain situational awareness, line-of-site to the strategic imperative and successful up-shift through the 4 "gears" of development:

1st Gear – Getting started and funded 2nd Gear – Launch and Market Penetration 3rd Gear – Market Expansion and Operational Execution 4th Gear – Operational Excellence and New Markets  As such, Investor-sponsored Operational Oversight would consist of:

•  Assisting the entrepreneur to ensure a credible business model worthy of funding exists

• Ongoing reports and metrics from multiple sources with the operational areas of portfolio companies

• Ongoing analysis of on the ground events, activities, changes, strengths, weaknesses, threats and opportunities

• Ongoing liaison with portfolio company management teams with respect to the findings of such analyses

• Ongoing management team accountability to investor interests

• Intervention with subject matter expertise when necessary

You wouldn’t drive a car with a blanket over the windshield and no dashboard while looking only through the rearview mirror.  Navigating one’s portfolio to success in today’s market requires the forward look, timely information, predictive analyses, situational awareness, management team accountability and, when needed, expert intervention available only through Investor-sponsored Operational Oversight.

Portfolio Company Operational Oversight consists of a sequence of standard actions that will objectively ensure your portfolio companies meet their business plan targets. That sequence of actions is done as follows:

1. Opportunity Assessment: Optimally we partner with investor(s) prior to funding to assist in the due diligence, agree upon metrics by growth stage and gain investor and entrepreneur agreement on the operational oversight approach for that company. This allows us to move directly into an Up-shift Partnering agreement with our portfolio oversight implementation.

2. Portfolio Assessment: This is where we and the Angel Investor evaluate the results of your portfolio companies and determine which ones need to be addressed, and advise you of our preliminary recommendations. The Portfolio Assessment is at no cost or obligation to the Angel Investor.

3. Diagnostic Analysis: Far more in-depth than the initial business Portfolio Assessment, this is where we conduct an on-site analysis of your portfolio companies that require attention, determine what situations exist, pin-point exact causes, and lay out a detailed remedial strategic plan of action. This is usually quite a major eye-opener for all concerned! The costs for the Diagnostic Analysis are borne by the portfolio company.

4. Up-shift Partnering Agreement: Once an approach and go forward strategy are completed with the Angel Investor and the portfolio company management team, a kickoff meeting is held to review the implementation approach for the strategic plan, including all parties' obligations and performance expectations.

5. Portfolio Oversight Implementation: This option benefits the investor and entrepreneurs as metrics by stage and reporting protocols are implemented at the outset, i.e. upon funding and/or initial market penetration. At the end of this the entrepreneur and investor have the following deliverables:

Investor Benefits
• Emplacement of reporting and monitoring controls and protocols
• Metrics suited to the stage of development with established thresholds
• Remote access to portfolio company reports and metrics
• Alerts that focus attention on non-optimal events or situations
• Recommendations as to issues to be addressed with management teams

Entrepreneur Benefits
• Tools and systems necessary to the success of his business plan
• Metrics suited to the stage of development with established thresholds
• Ease of reporting metrics to investors
• Alerts that focus attention on non-optimal events or situations
• Mentoring by their Angel and access to subject matter experts

6. Strategic Turnaround: Based upon the remedial strategic plan, we will write and project-manage a series of tailor-made, detailed tactical projects designed to achieve the overall strategic plan within the shortest possible time and within existing portfolio company resources and capabilities. The emphasis of these projects will be to make the best of what the portfolio company already has in place for maximum movement toward their business plan targets. These remedial programs may include:

• PR, Marketing and Sales Channel Campaign Development
• Installations of Metrics Dashboards and Reporting Systems*
• Human Capital: Productivity and Teamwork
• Organizational Development
• Financial Management
• Supply Chain Management
• Customer Relationship Management
• Executive Coaching
• On-site workshops

During this turnaround project you will see your portfolio company rapidly evolve into what was envisioned by the business plan toward planned financial and liquidity targets.

7. Maintenance Phase: Once the "heavy lifting" has been done, our performance monitoring services will help you keep your portfolio company running at peak performance on an on-going basis. Based on a consolidation of diverse but proven management methodologies developed and refined over decades, the Maintenance Phase enables you to keep a finger on the pulse of your portfolio companies and facilitate any mid-course corrections or SME interventions needed in order to ensure accomplishment of the business plan. This is your best insurance for ensuring the envisioned liquidity events occur as expected, without having to personally attend operational meetings.

Multiple Company Oversight

The above process can be applied to one or numerous portfolio companies. Implementation of the controls and dashboards provides for convenient remote oversight of multiple portfolio companies from anywhere all within one consol. The multiple oversight approach summarizes a set of portfolio metrics based on your Boards’ goals and targets.

*A Note on Company by Company Metrics

Questions to ask in determining portfolio company metrics:
1. What metrics drive the business in the way you see needed?
2. Do these metrics measure the progress in the current stage of growth?
3. Are your metrics appropriate for the industry?
4. Do you and the entrepreneur agree on the metrics? If not, why?
5. Are the metrics for the investment aligned with those agreed upon by the angel group to be used based on the company type and company stage?

Typical performance metrics used by angel groups include burn rate, cash on hand, revenues, customer quantity, income, etc. What is most important is to select metrics that are appropriate to the type of investment, the particulars of the company and its stage of growth.

CEO performance, monitoring the company, mentoring the CEO, tracking milestones, and responsive markets are all elements leading to positive exits. The Portfolio Company Operational Oversight System makes that a convenient reality.