Investment Thesis

Investment Thesis

Our investment criteria at Venture Mechanics is quite simple:

1. Capital-efficient businesses that generally require less than $1M in total investment before reaching a positive cash flow. This is normally broken into two phases. Phase One would typically require no more than $250K investment in order to reach revenue-generating stage and have enough sales history to accurately determine the needs for Phase Two. Phase Two would typically require an additional $250K-$750K investment, after which the company would be expected to reach a cash flow positive state, if not GAAP profitability.
2. Software-as-a-Service (SaaS) and other business models in general are the ideal kinds of ventures that are likely to meet the funding attributes noted above and also generate healthy cash flows back to the equity holders.

3. “Ideal niche” sectors that are big enough to be economically interesting but not so big that the company would soon be chased by VC-backed fast followers.
4. Businesses we want to own, not flip. Unlike so-called “venture incubators” or VC funds, we do not intend to evict or sell our companies after they reach a certain stage. We want to keep owning them as long as they generate strong positive cash flows back to the stakeholders, and roll some of those profits back into launching more companies.

Venture Mechanics seeks out “germinators” who have a great business concept but have typically not yet even written a business plan or incorporated. The “founders” (initial management team) will be recruited only after the investors’ due diligence team and the Mechanics have fully vetting and committed to backing the company, i.e. once we know the exact set of skills that will be required on the management team and board.

Venture Mechanics builds lightweight companies, keeping the burn rates low by leveraging a common team of senior executives, including the Mechanics plus a very long bench of advisors and consultants of varying business disciplines and industry sectors. For example, while an early stage startup may not require a full-time CFO or general counsel, each company has access to our technicians as needed.

Geographically we have a strong leaning towards Washington State-based companies, although Portland-area companies can be easily considered if they agree to domicile in Vancouver, WA. While we recognize that germinators, advisors, investors, et al, may come from any state, or country for that matter, when it comes to leveraging the shared resources of Venture Mechanics it usually makes the most sense to headquarter the companies in Washington State. In addition, because we usually employ an LLC structure in order to efficiently distribute cash flows to stakeholders, there are taxation and IRS reporting challenges for stakeholders when basing companies out-of-state that we would rather avoid, Standard caveat applies that there are exceptions to every rule.

How to submit your business concept

If youve read our investment criteria above and believe that your idea might be a good for the Venture Mechanics model then please download this PowerPoint Template. fill it out as best as you can, and submit it to info@venturemechanics.com.