Fund allocation from money lender

Fund allocation from money lender

May 19th, 2016

Fund allocation from money lender

The idea is not to perform a full risk assessment or due diligence study. Indeed, it is to deliver an ORE based simplified functional a priori analysis for each company which allows comparisons, bench-marking for Fund allocation from money lender. The ORE based simplified functional analysis is scalable. It  allows a company to opt to get deeper in their risks analysis to further enhance their chances of success. Additionally, one can use the analyses for an individual company or for an investor/fund willing to decide if to invest in one or more companies in a given portfolio, and in which proportion.

The ORE algorithm guides investors to allot their capital to the lower risk companies. Additionally we can implement an upward/downward analysis.
The Figure below shows how ORE for Startups would advise a priori to allot investment funds among the companies present in the test portfolio. The portfolio includes seven startups presented in prior blogposts. In fact it assumes that, at deployment, they would all be at the same Phase 1 of development.

Fund allocation from money lender

Proposed funds allocation based on a priori deployment of ORE for Startups in Phase 1 on the test portfolio of 7 companies.

Corporate level analysis

Each company, if interested, can receive a corporate result sheet with a verbiage. The verbiage explains the specific results delivered by ORE applied to Startups. The company may also elect to require a more detailed analysis.

Below we give a sample of results for Startup #1.

Startup #1 a priori ORE for Startups deployment results.

  • Startup #1 ranked above average (above average risk) in Phase 1. At average at Phase 2 and below average at Phase 3 within the portfolio.
  • Startup #1 “party breakers” are in Phase 1, namely in Industrial Process Design and Management.
  • Startup #1 strong points are Key Material, Key Supplier and Customer Experience.
  • Key Material and Key Supplier are particularly strong as the company has indicated/ adopted an out-of-the-box solution to avoid having one single supplier.
  • Customer Experience is reportedly excellent. And finally,
  • Despite the crisis hitting Italy, the medical spa business is recognized as a “necessity” with relatively little competition and an official recognition by the Health Ministry. That helps explaining why Phase 3 results are the best among the portfolio.

 

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Category: Risk analysis, Risk management

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