Essay on Onset Ventures

2213 Words Feb 13th, 2014 9 Pages
ONSET Ventures: Written Case Submission In 1984, ONSET Ventures was established as a seed stage venture fund by Terry Opdendyk and David Kelley. With $5 million in capital, this “feeder” fund was created with the help of three later-stage venture capital firms, and investments from 31 CEOs as well as various entrepreneurs. The goal of this initial fund was to make seed stage investments that would later be backed by the larger, later-stage VC firms. During this time, Opdendyk embarked on a study of 300 separate investments from various VC firms. From this analysis, ONSET developed an investment model that allowed the firm to prosper.
ONSET’s model contains six factors that help the firm locate and invest in attractive opportunities.
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Ignoring what the market is telling you is a recipe for disaster. The most successful entrepreneurs are those that can identify a want that is not being fulfilled. The discovery of this want can only be found if the entrepreneur is in tune with the ever changing competitive environment.
Third, the business model must be valid before hiring a CEO. Opdendyk’s research showed that if the CEO is hired before the business model is refined, the individual could revert to a model that he/she used at a previous job. By fine tuning a business model before the CEO is hired, the research showed that the incoming CEO can better execute on the plan. While I generally agree with this factor, I also believe that ONSET may be doing itself a disservice by strictly adhering to this principle. An effective business plan requires talented people to effectively work through problems and identify risks. This principle assumes that an incoming CEO will always fall back to a previous business plan. I think this a fairly large assumption as an incoming CEO who has been a successful entrepreneur should realize that each business plan must be tailored to the product and current market conditions. I believe that incorporating a CEO in the business planning process could ultimately add value to the start-up project.
The fourth factor in ONSET’s model is that, “you spend money only to add value as perceived by those individuals providing the next round of

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