HOME
ABOUT
INVESTMENT PORTFOLIO
INVESTMENT STRATEGIES
DIRECTORS
CONTACT
SUBMIT INVESTMENT INFORMATION
|
Return Factor
For our first round investment, there must exist a reasonable business scenario for Westrock to receive an annualized internal rate of return of 30%.
Since 1994, our investments at the seed to early stage rounds have been from $100,000 to $1.8million, however, we are most comfortable not being the first or only investor.
We typically stage our investments that are tied to clearly agreed-upon milestones and work diligently to assist management in achieving those milestones.
We are not finders nor are we passive investors; therefore, we take a team approach with every client and assign a portfolio manager to be the liaison between our firm and the portfolio company.
We work very closely with accredited individual investors and make investments through the use of limited partnerships or in certain situations; the individual investor may make a direct investment in a portfolio company.
Founding Team
While the management team does not need to be complete, the founders need to be committed, out-standing, creative and resourceful individuals who are driven to build a major enterprise. It is important that they work together as a team and that they have clearly delineated areas of responsibility. Each member of the founding team must have a demonstrated ability to prioritize and a will to win. Personal characteristics of intelligence, integrity, and a strong work ethic are also necessary.
Market
The size and growth rate of the market is often crucial to a company’s success and certainly has a major impact on the ultimate size of that success. Often what propels Westrock's overall financial success from above average to extraordinary are the large wins of only a few investments. Accordingly, market size and growth characteristics are key in our investment decision-making. As a general rule, markets requiring regulatory approval are avoided.
Product/Service
The product or service offered must be unique and serve a genuine need, cost effectively, without requiring a significant behavioral change on the part of the purchaser or end user.
The stage of development of the product or service generally ranges from six months prior to revenues to one year after sales begin. Projects with a high inherent development risk are avoided.
Service businesses that are personnel intensive are not favored.
Business Model
The economics of the business must be such that it is not capital intensive and it provides for high sustainable gross margins. The combination of these two elements allows for a high, internally sustainable growth rate, thereby minimizing subsequent dilution. These characteristics are also highly valued in the public markets or by potential acquirers.
Gross margins need to be at least 50% and in most cases should be greater than 60%. Their sustainability requires either barriers to entry or significant defensible advantages over competitors.
Gross margins are at times subjectively defined in some Internet business models. Often the relevant economic equation defines the cost of customer/member acquisition versus the lifetime value of that customer/member to the business.
Competition
Entrepreneurs need to display a fundamental understanding of the competitive matrix in which their business operates. While we do not require the business to be the market leader, we are unlikely to back the fourth or fifth horse in a six horse race.
Exit Strategy
The business must ultimately be an attractive IPO or acquisition candidate. These should also be the potential desired outcomes for the founding team.
Selected Industries
Application software
- Email marketing and customer relationship management
- Email marketing and music distribution
- Customized platform and enterprise solutions sofware
- Medical and radiology
Education
- Curriculum support and content development for children
- Adult education and entertainment
- On-line and distance learning applications
Manufacturing
- Medical devices
- Senoring devices and technology
- Production of Hydrogen gas for Fuel Cell technology
Food Distribution
- Soya processing and refining
- Nutrtional beverages and products
Sports and Entertainment
- SCCA Racing Cars
Financial Services
- Website development and platform technologies
(C) Copyright 2004-2006, Westrock Partners, Inc.
|
Westrock
Partners
CORPORATE
OFFICE
110
South State Street
Suite 200
Newtown,
Pennsylvania
18940
215/860-3322
215/860-3653
fax
|