Harbright's Investment Approach
We follow a fundamentals-based approach to screening potential investments.
Harbright follows a simple, straightforward thought process that guides our investment decision making. We focus on value creation and businesses fundamentals. Some of the questions we routinely ask in the due diligence process include:
- Does your product or service save customers, time, money or other resources?
- What is the customer currently experiencing that your product or service resolves?
- Does your product or service create new revenue opportunities for your customers?
- How effective is your solution?
- For consumer products, does your product or service create a user experience that doesn’t currently exist or that’s better than competitors?
- What other benefits do you create for your customers?
- What specific aspects of your product or service create value?
- Define the market segments & buyer characteristics for your products
- What are customers willing to pay for your product?
- Describe your traction in the market
- Are your products or services currently selling? If so, where?
- If your products or services aren’t yet for sale, what technical or other milestones must be reached to make your product available?
- Define your distribution strategy
- How much will the channel strategy cost?
- Please provide a proforma.
- Please define how your business costs scale.
- Are revenue streams seasonal/cyclical?
- What unique experiences, skills, or connections do they have that help you succeed?
- Describe your company culture.
- Who are the potential competitors?
- Are there alternative solutions to the problem you’re solving?
- Define the barriers to entry.
- If IP is trade secret, how do you protect it?
- If IP is patented, are they approved, pending, etc? Has a right to practice analysis been completed?
- What value will the spend bring to the company?
- What is your current and projected burn rate?
- How much capital are you seeking?
- At what valuation?
- Who are the current investors?
- What multiples of sales or profit are evidenced in recent transactions for similar companies?
- What is your plan to create an exit for investors?
