Valuation Fundamentals - Going to the Dogs
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According to Venture Deal (February 11, 2009), FetchDog.com raised $4 million in venture capital to "improve its website and expand its management team." Founded by actress Glenn Close and her husband, the company has heretofore been privately funded. Dogs are big business. The Morning Sentinel reports that pet owners are significant spenders with approximately $43.4 billion in 2007 sales for Rover and Fido, "up 88 percent from 1998." See "Portland FetchDog.com in growth mode..." by Ann S. Kim (February 10, 2009).
Wow and congratulations to FetchDog.com.
For those plan sponsors with allocations to venture capital ("VC"), one has to ask lots of questions about the big 3 fundamentals - economy, industry, company, right? Shouldn't an Investment Policy Statement require VC and private equity managers to explain how a company is expected to make money? It sounds straightforward enough but recent articles suggest that some VC fund managers have shelled out cash first and asked questions about business models later. In some cases, it's worked but halcyon days are long gone. The IPO market is closed for all practical purposes and easy money makes it harder for acquirers to purchase companies with debt.
What kinds of questions do you ask your VC and private equity managers about the fundamentals, a la Graham and Dodd and then some?
