Visionary PE & VC firms use SVSG for their diligence
Our clients are making better investment decisions and injecting Silicon Valley know-how into their portfolio.
What’s the overhead?
A leading cybersecurity company achieved on-time release after a prominent acquisition.
A leading cybersecurity company had identified an acquisition target that had the potential to significantly accelerate their product roadmap. As part of the due diligence process, the company wanted to not only assess the quality of the technology, but also jump start the integration process. SVSG reviewed the product roadmaps and technical architecture of both companies in order to develop a roll out plan that included all of the dependencies and internal resource allocation that would be needed to hit the release deadlines of the financial model that was used to justify the acquisition. With plan in hand, the acquirer was able to hit the ground running on day 1, which resulted in an on time release.
How useful is the product?
A large VC firm gained peace of mind knowing that they were not missing out on the next big thing.
A large VC was evaluating an early stage startup that had built automated testing tools for software developers. The startup had a great pitch deck, a tech-savvy team, and happy early customers. But there is a big difference between pain, and screaming pain, and this VC asked our take as to where this company’s roadmap would land on that spectrum. CTOs from our braintrust reviewed the pitch deck, product demo and roadmap and reported back that the startup’s future state would only provide incremental improvements over the roadmaps of its better funded competitors. The investor gained peace of mind knowing that they were not missing out on the next big thing.
Is the IP defensible?
An investor group was able to negotiate down the valuation to properly account for the product maturity.
An investor was impressed by the pitch given by an adtech company in the VR space. The company claimed to have developed proprietary IP that could place digital adverts in the metaverse in a novel way. We were brought in early in the deal cycle to evaluate both claims. While the ad placement method was indeed novel, the technology turned out to be an adaptation of an open source library and the proprietary code from the company was much less than had been claimed. Because the investor did their diligence early in the process, they were able to negotiate down the valuation to properly account for the product maturity and the further development needed to prove out competitive advantage.
Why is the tech not working?
A PE Firm reduced operating margins by 25% after an adtech acquisition.
A PE firm had bought a promising adtech company. They set out to invest in AI technology that would automate a business process that was currently being performed manually and represented a double digit line item in the operating expenses. The company’s management felt confident in their ability to design and develop the technology and assigned a senior tech leader from their in-house team to lead the effort. Unfortunately, the individual in charge had never developed an AI solution. One year later, the company was six months behind schedule with an MVP that performed no better than chance. The PE firm brought SVSG in to assess the situation. The management worried that the team had developed the wrong set of algorithms. An SVSG CTO with extensive AI experience led the investigation and was able to quickly pinpoint the issues the company was facing. As it turned out, the company had selected a suitable machine learning platform, but had numerous gaps in their data pipeline leading to corrupted models. With the issue pinpointed, the company was able to deliver a working solution that led to a 25% drop on operating margins.
Are the assets worthwhile?
A financial services firm made an informed decision to acquire the assets of a startup that had recently closed its operations.
A financial services firm was looking to acquire the assets of a startup that had recently closed its operations. The startup claimed to have developed novel AI technology but was unable to reach product market fit. The acquirer saw the potential to accelerate the product roadmap for one of their offerings, and wanted to know to what extent the AI was proprietary and whether the technology was suitable to be managed by their in-house team. SVSG CTOs determined that the technology was sound, but that there was significant technical debt and little documentation. Further, the founders exhibited exceptional talent, and as such the acquirer felt confident in increasing the retention packages to bring the team in-house along with the assets.