I often write about criteria angel investors should consider when making an investment. Recently the Symfonie Angel Fund invested in one of the few companies that fit our criteria - Venzeo. Time will tell if we were right or wrong with Venzeo and there is much hard work ahead in order for us to make this investment succeed. I hope my post is helpful to all the other angel investors out there who are considering their next investment.
1. The product fills a market need. Any business that uses photos for documentation or evidence can save time and money by using Venzeo.
2. Similar businesses are successful in other markets. Look at the US. Fotoin (www.fotoin.com) and pdvconnect.com have emerged and are growing rapidly.
3. It's not all plug 'n play. Venzeo's service is easy to use. The application downloads easily into many mobile phones. But once business start to use the service and they realize the benefits, they come back to Venzeo, ask for more devices and ask for customisation to their specific systems and procedures. Customers that integrate a solution into their business are customers that are in for the long haul.
4. Wayra - Venzeo received an investment early on from Wayra, the tech incubator affiliated with Telefonica. Venzeo and Telefonice both come out ahead. Venzeo developed a relationship with local units of Telefonica to distribute Venzeo service to Telefonica customers. This partnership has already begun winning customers.
5. Proven demand - Vezneo is winning customers. The typical customer starts with trial use period. Once they start to use the service and realise the benefits, they quickly add users to the installation base. Today's small subscriber becomes tomorrow's key customer.
6. Scaleable - Adding more users means adding more servers, not building factories or leasing more real estate. Sales can be outsourced and franchised to re-sellers who are already close to the end customer. When local subidiaries of large international companies share best practices with each other, Venzeo wins additional business.
7. Hard to displace once embedded - Venzeo's service is not particularly expensive. Once a customer starts using the service and likes the service, there's no great incentive to switch to another supplier. If anything, changing suppliers can be painful. This is why first movers like Dropbox, Facebook and LinkedIn are so successful. Customers like to stay with something that works.
8. Highly fragmented industry - There are only a handful of companies like Venzeo operating and there are hundreds of thousands of companies that can become customers of firms such as Venzeo. Fragmented industries mean there is ample opportunity for new firms like Venzeo to compete and succeed.
9. Not easy to replicate - Developing the application takes time money and effort. Venzeo had a small, but dedicated, team of developers working full time for more than a year before it could launch a version of its service. By learning from customers Venzeo develops value added solutions that enhance it's marketability.
10. The modest investment we make can have a large positive impact on the company. Venzeo's core solution is developed, tested, proven and operations. What's needed now is build out of sales and marketing, coupled with value added improvements. The marginal dollar invested today goes quickly to the bottom line, so the company is well positioned to become self sustaining.
Find out more about Venzeo at www.symvest.com/prereg/venzeo. Feel free to contact me directly at msonenshine@symfoniecapital.com if you have questions or comments.
