September 06, 2005

Is your company VC fundable?

We primarily fund early-stage companies looking for 1st round funding, which is typically $3-5 million. I want to see the potential of a $100 million revenue per year company. It’s interesting to me when I see company projections and forecasts based on compound interest. I don’t think about compound interest. I can do Excel, too. I invest in companies to get 2-3 times the multiple of revenue (implying at least a $200M exit valuation). And sure, VCs have bigger appetites these days to build smaller, more targeted companies, in less time. And yes, M&A is the more likely exit. That’s the trend. I look for deals that will get 10x the return, and I don’t really care if that takes 3 years, 5 years, or 8 years.

-- George Zachary, Partner of Charles River Ventures in IBD Network