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OPPORTUNITY
The investment banking and private equity industry has grown significantly in the past fifteen years, with more than $50 billion under management in the United States. This significant growth of assets under management has forced the tier one banking and private equity firms to increase their per-company investment to a minimum of $40 to 50 million. The size of the investment has lead the traditional private equity companies to shift their focus to investments and buyout opportunities which deploy a much larger amount of capital than typically required by entrepreneurial firms.
Technology, Communications and
Homeland Security industry advancements:
- Will continue to produce fast-growing information technology and communications companies.
- Homeland Security industry growing from a $140 billion in 2004 to over $500 billion by 2008.
- Provide the new tools of business in this expanding market.
- Many are located in 'Silicon Valley' - fed by talent from over 65 nearby colleges and universities including Stanford and UC Berkeley.
- In addition, located within a 20-mile radius are the HQs of Cisco, Google, Sun Microsystems, Siebel Systems, Yahoo, and hundreds of other world-leading information technology firms.
Even in California, however, obtaining a “Special Situations” investment for fast growing organizations is frequently a difficult and time-consuming task. Extended approval times, large minimum transaction sizes, and lack of entrepreneurial and industry experience found in many venture capital firms can be frustrating to entrepreneurs who carry the daily burden of funding growth. Most often, entrepreneurs are disappointed with the process and rarely maintain control of their company.
“Special Situations” funding is heavily relationship dependent and can be a highly inefficient market for capital due to the entrepreneur's time-to-market constraints and lack of familiarity with “Special Situations” financing. As a result, these smaller equity investments are often at dramatically lower valuations and often contain significantly more favorable terms for investors than later venture financings.
Emerging company executives value Forté:
- Experience both on the operations side
and on the investing side.
- Complementary set of business skills.
- Expanded business network provided by experienced investors.
- Expanded access to the private and
public capital markets.
A major benefit to entrepreneurial companies is the experience and network provided by a significant shareholder obtained through a smaller, earlier stage offering and, at the same time, not surrendering a major portion of the equity ownership.
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