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It is our practice as active investors to work closely with the management teams of our portfolio companies. While this begins with the due diligence process and typically involves leading the initial institutional investment rounds in which we participate, we are proactive in working with management after our investment. We maintain our team approach and two partners typically continue to work with each portfolio company. At our weekly partners’ meetings we review the progress of portfolio companies, which provides the opportunity for the partners to leverage their collective experiences and networks to help portfolio companies. We complement our weekly reviews of portfolio companies through frequent, informal updates and discussions between the partners.
Active Involvement with the Management Team: We are active participants in the accountability of management and governance of our portfolio companies. We maintain frequent contact with the CEOs, senior Partners of the management team, outside board partners and co-investors of our portfolio companies, and this is facilitated by our focus on companies located in the western United States. To supplement this regular, informal contact with the management teams and co-investors, we generally require the portfolio companies to hold board meetings every four to eight weeks, depending upon the stage of the company.
Introductions to Potential Customers and Strategic Partners: Entrepreneurs generally seek to work with a venture capital firm that can help provide access to potential customers and strategic partners. We have a strong network of senior executives in both public and private companies in industries such as media (digital, print, television and radio), cable and telecommunications, technology hardware and software, financial services, legal services, aerospace and defense, among others. We actively make introductions for our portfolio companies and assist in arranging meeting with senior executives at the potential customer or strategic partner. We also regularly meet with these senior executives to help us better understand the market opportunities and the competitive landscape, which in turns helps us to provide better advice to our portfolio companies.
Building Management Teams: Often, early stage companies do not have sufficient management teams in place to operate all aspects of a growing business, particularly as one matures and enters different stages of the company lifecycle. We leverage our network of executive search firms, entrepreneurs, other portfolio companies and venture capital firms, as well as service providers such as investment banking, legal and accounting firms to help find the appropriate candidates to replace or augment the management teams of portfolio companies. In some cases, these relationships have led to incubating companies in our offices.
Assistance with Subsequent Financings: We help our portfolio companies prepare for their next financing rounds in several ways. We require the management teams to develop reasonable revenue, partnership and operating milestones that they can accomplish with existing capital. We work with the management team to develop a financing strategy that includes the timing of the next financing, a list of appropriate potential investors and the presentation and diligence materials that new investors will require. At the appropriate time, we make introductions to potential investors. We also have strong relationships with several venture and commercial debt providers.
Optimizing Exit Strategies: Given our collective experience in providing strategic and transactional advice at leading investment banks, we help counsel the CEOs of our portfolio companies on optimizing the company for a successful exit, whether by acquisition or through an initial public offering. Often, this includes helping to accelerate the portfolio company’s growth through acquisitions or mergers of complementary companies. We work closely with the management team and board to identify potential acquisition and merger candidates to extend the portfolio company into new geographic and business markets, and we provide sound advice to help execute on such acquisitions. At the appropriate time, we help the management team identify and work with potential acquirers or, if appropriate, pursue an initial public offering.