Achler was quick to note that although a herd mentality is apparent in regard to VCs investments in certain sectors, business fundamentals still apply in making investment decisions. One of the fundamentals Achler identified is in-house technology expertise. With capital rushing into the new economy a few months ago, a lot of firms got funding and then outsourced everything. Kettle partners also scrutinize deals to make sure that firms have a roster of solid strategic partners and a strong sales and distribution network. Ignite is an example of a company with name-brand customers like AOL, Achler said, adding It s factors like that that persuade us to invest.
Partners also watch for a sustainable revenue base.
Getting money from customers puts you in a better position to receive funding, Achler explained. He acknowledged that the team s track record isn t flawless. We really wanted to move the firm into some of the emerging technology, but the management team wasn t able to make the transition out of accessories and into the web and software, he said, adding that the experience reinforced the lesson that it s all about execution and the team. Dale Fox, CEO of Concept Kitchen, was unavailable for comment. Closing the deal Once funded, Kettle expects to have a 20 percent stake in most of the companies.