Let’s do the math. There are well over 10,000 private venture-backed companies in the US alone (over 65,000 WW, per VentureSource, 2011) and many thousands of microCap public companies, many in technology sectors. This results in a target rich environment for daVinci Capital Group. Finding the right candidates starts with both our own “desk research” which we call “outside-looking-in” analysis, but also from “deal flow” referrals from a broad system of contacts, including:
- Extensive personal networks of our four Principals
- Networks of consultants close to us and our staff
- Investment bankers
- Industry organizations, including frequent attendance at industry events
- Advisory firms, including attorneys, accountants and public relations.
Our deal flow network is very strong and results from our many years of experience in these markets. We are not only very well connected to the public markets (for example, through investment bankers), but we are also true Silicon Valley/Tech “insiders” with many years of trust with key venture capital. This places us in an ideal position to learn of opportunities that would otherwise not be shared with general private equity investors.
Our information source base is also very robust and facilitates efficient identification and evaluation of investment companies. And unlike venture capitalists that must evaluate hundreds of business plans before selecting an investment opportunity, daVinci need only evaluate dozens of companies to find good investments. Venture firms also have to sift through privately created business plans and presentations that often hard to evaluate without substantial independent verifications. In contrast, daVinci has the benefit of publicly filed SEC documents that must be completed with audited financial statements and meet stringent standards, such as Sarbanes-Oxley requirements. daVinci also has access to many other sources of accurate financial, sales, market, product and competitive information. These additional sources include databases (e.g., Capital IQ, Nasdaq.com, Bloomberg, Morningstar, etc.) that enable daVinci to concentrate its search in specific industry market segments rich with undervalued microCap companies. From there the Fund utilizes proprietary approaches to focus our efforts on companies that are good candidates for further evaluation.
Thus, daVinci’s approach can more quickly identify good opportunities and complete deeper due diligence in shorter time frames than in the venture capital or private equity worlds. This makes us active, nimble and knowledge-based investors in public companies.
