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Onset Ventures

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ONSET Ventures: Written Case Submission In 1984, ONSET Ventures was established as a seed stage venture fund by Terry Opdendyk and David Kelley. With $5 million in capital, this “feeder” fund was created with the help of three later-stage venture capital firms, and investments from 31 CEOs as well as various entrepreneurs. The goal of this initial fund was to make seed stage investments that would later be backed by the larger, later-stage VC firms. During this time, Opdendyk embarked on a study of 300 separate investments from various VC firms. From this analysis, ONSET developed an investment model that allowed the firm to prosper.
ONSET’s model contains six factors that help the firm locate and invest in attractive opportunities. First, a full-time mentor with both start-up and larger business experience is assigned to the portfolio company’s management team. This mentor is an independent advisor to the management team and helps the company during the incubation process. Opdendyk found that the presence of a mentor typically increased the success rate of the investment from less than 25% without a mentor to over 80% with a mentor. I agree with this element of ONSET’s model. During the start-up phase, management teams can struggle to come up with effective strategies and properly assess the risks involved. By bringing in an outside consultant in the form of a mentor, a fresh set of eyes can examine the strategy to ensure that the management team is thinking rationally about the problem at hand.
The second principle is that the start-up company must be willing to deviate from the initial business model. While a well thought out business plan is vital for success, management must also be willing to adapt to changing market conditions. ONSET’s research showed that strict adherence to the original business plan proved to be a great way to fail. To be successful,

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