Thinking About Thinking

Talking Technology On Fox News

Posted in Growth Equity, Technology, Volition Capital by larrycheng on September 17, 2010

Volition Capital Leads First Investment – G5 Search Marketing

Posted in Growth Equity, Technology, Volition Capital by larrycheng on August 10, 2010

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I am pleased to share in today’s announcement that Volition Capital has led its first investment with a $15 million financing in G5 Search Marketing

The investment thesis for G5 is pretty simple.  100% of mid-size businesses would love to have an online presence that consistently generates high quality, low cost leads – and 99% of mid-size businesses don’t know how to do it.  To achieve the goal you need to be expert in website design, search engine optimization, search engine marketing, and multi-channel lead management.  And, perhaps most importantly, you need to understand how all of these areas interrelate specifically in your industry.  G5 fills that gap in certain large verticals where they have domain expertise – like self-storage, multi-family housing, and senior living.  The thousands of mid-size businesses that have become G5 customers have their website and marketing efforts outsourced to and managed by G5, and they see the impact immediately in terms of low cost, high quality leads. 

The wide disparity in results between using G5 and doing it yourself has led to a highly recurring, bootstrapped business which is right down the sweet spot of Volition Capital’s investment focus:

  • High growth & solid revenue base: 20 consecutive quarters of record revenue. 
  • Capital efficient & founder-owned: They have never taken any outside capital or debt. 
  • Under-served geographic area: Beautiful (and hard-to-get-to) Bend, OR
  • Volition Capital investment: First and last institutional capital, active Board involvement

One attribute of G5 which is key to all of our investments is we want to see the team have an “aspiration for greatness”.  Every Volition portfolio company needs to have both a proven business and breakout potential.  The latter starts with the management team thinking big – which is certainly the case here.  The number of mid-size businesses that could benefit from using the G5 platform is not just thousands, or tens of thousands – but potentially hundreds of thousands if not eventually millions.  The first-generation “local search” vendors adjacent to this space have a narrow/weak offering and poor value proposition – which is readily obvious given their high customer churn rates and lack of profitability.  G5’s intensely loyal customer base and strong financial performance demonstrates that they are doing things both differently and better.  We believe G5 represents the next-generation in local marketing solutions and couldn’t be more proud to partner with them. 

Cortera – Crowdsourcing Business Credit Ratings

Posted in Volition Capital by larrycheng on March 16, 2010

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Congrats to Volition portfolio company, Cortera, which launched their new website yesterday.  Cortera has a pretty simple mission in life – bring great financial and credit information on businesses to users at their fingertips for free or nearly free.  Cortera also allows any business to rate any other business on how they pay their bills.  It’s crowdsourcing for credit. 

It may not be obvious, but business credit ratings are driven by a few thousand large companies.  They contribute accounts receivable data (information on how their customers are paying them) to companies like Cortera and others.  That data is sliced and diced to produce credit ratings that businesses use for every day decisions like extending payment terms and credit decisions.

The flaw with the model is that if you are not one of those large companies, the experience of how your customers pay you never enters into the calculus of credit ratings.  On the flipside, if you aren’t a customer of one of those large companies, you may never be rated for your credit worthiness, even if you pay your bills in a timely fashion.  Millions of small businesses are left out of the credit equation today.

The only way to address this problem is to democratize the inputs for credit ratings.  Allow any business to rate any other business on how they get paid.  Expand the data contributors from a few thousand companies to a few million companies.  And then make credit and financial data easily accessible and very inexpensive.  Better data for everyone is the result – that’s the aim for Cortera.  It’s a grand and worthy goal that we’re proud to be working with them on. 

 

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