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Onset Ventures.

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American University in Cairo MBA Program Summer 2004 MGMT 519 ONSET VENTURES Group: Ashraf Ayad Rasha Galal Maria Abouseif Mahmoud El Gallad Mohamed Khalil Onset Ventures ONSET was founded in 1984 on a well- thought analysis of the VC industry. It was intrigued with the process of starting and growing new businesses. ONSET distinguished itself from its competitors by its investment focus. ONSET focused on initial and follow-on investments in seed stage projects because returns are more profitable at this stage. The main risks ONSET faced were technical and marketing risks. ONSET had its own adopted model for assessing opportunities in venture capital market, this model included:- * ONSET won't lead a start-up in an industry where they don't have the ability to reinvent a business model. Accordingly ONSET won't try to invest in a niche that is entirely new to it. We agree with this point, as the risk will be minimised if ONSET has the expertise in that field of business before. * ONSET will only invest in deals where it has a local presence. As the more distant they are from the management team, the harder the value ONSET can add to the business. We disagree with that trend, because many firms have its own qualified management team and their leaders and board have the necessary traits to lead the firm. ...read more.


As a consequence the average of the VC fund increased by 40% to $71 million. Thus, there was more liquidity in the market, and IPO market was quite active at that time which also boosed the VC investment. ONSET 3 had 4 partners, and they usually took one seed stage deal per partner per year. Since the average seed stage investment per deal has also increased over the years - it was estimated to be $4.5-$5 million per deal in ONSET 3, the investors would have to raise 4 deals x $5 = $20 million per year. It also takes 4 years from initial investment to liquidity, and therefore based on a 4 year cycle, the investors would have to raise $20 million x 4 = $80 million. Assuming a $15 million in expenses and fees, then the total would be $95 million. When the investors went around to fund this money, they came back with even a higher figure from interested investors - a $140 million fund. They have the choice of taking the money, since they are in a very good economical period, and they wouldn't be sure to raise the same amount of money after 4 years. However, to take the money, they should have a plan of what to do with the extra $45 million. ...read more.


After a few sessions of brain storming, they decided to shift to the sales force compensation system which was quite intriguing. Onset and TallyUp were followed by a number of successful decisions. Their decision to use the expertise of a part-time compensation consultant was a good one. Also, their extensive market research helped them assess and evaluate the needs of their customers in order to be able to create an off-the-shelf product. Moreover, the Socratic methodology efficiently used by Onset helps outline and define the value chain of TallyUp's product. Dividing the team into two teams, one concentrating on improvement of the technical side and product design while the other doing the market research was an excellent step to minimize efforts and save time. Also, this led to augmentation of the product design with information obtained by the market team. By attracting two paying development partners, TallyUp and Onset outperformed their efforts in a step enabling them to try their product and fine tune it. However, their decision to hire a CEO was a little early since their business model had not yet settled. Moreover, their product was not yet introduced in the market and not yet fully developed. Finally, Onset should consider financing part of the beta stage before releasing the product in the market. It should also accept part of the funding from VC firms since the VC market was hot. So, Onset should take advantage of this current situation. ONSET Ventures 5 ...read more.

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