|
GE Equity's Goals
GE Equity invests approximately $1bn annually
in growth capital for private companies exhibiting strong growth and
established
business
models.
GE Equity's initial plan was only
to invest in areas unrelated to GE, with an eye toward making some money.
Having understood how
equity investing and growth are converged, the top management of GE
Equity changed the company's strategy. It was decided that GE Equity should
make investments in companies, technologies, and distribution channels that
could further the strategic interests of the various GE businesses.
Today, GE Equity's venture
investment goal is to build a world-class, global, private-equity business.
The second goal is to extend GE's management and operating systems to the
portfolio companies.
Value-Added Investing
Ventures associates with GE Equity
benefit immensely from GE's value-adding capabilities. They gain credibility
as a GE partner and get access to GE's wealth of industry-specific knowledge
and research, marketing, sales, and distribution capabilities. GE Equity
also created Community.com as a portal for the companies in which GE Equity
has invested so they could come together and interact. Using this web-tool,
the companies are able to sell to one another and take advantage of GE's
purchasing power.
GE often works out a licensing
agreement for a portfolio company with General Electric. It can also help
start-ups over some trouble, sometimes charging prevailing consulting rates
for its guidance.
GE equity does not seek to
dominate the companies in which it invests. This approach characterized by
support and respect for smaller enterprises as well as willingness not to
seek control is an important aspect of the company's success. On their part,
entrepreneurs see in GE Equity a value-added opportunity to get where they
want to be more quickly than they could with a venture capital firm, that
provides only cash.
Highly Disciplined Business
Management System (BMS)
BMS is central to GE Equity's
management and its venture activities. Each potential investment undergoes a
rigorous examination procedure developed by GE Equity top management and
carefully selected probability-and-decision theory experts.
GE Equity
developed a systematic investment approach based on decision and probability
theories, and it is also known in the marketplace as having the most onerous
due-diligence
checklist in the world of corporate venture investing.
The due diligence report explores
in depth and provides information on:
-
the investment rationale and
investment considerations
-
an industry and company overview
-
value proposition
-
management team
-
company's marketing strategy
-
capital structure
-
financial assumptions
-
comparable companies
-
key risks and uncertainties.
Portfolio Management...
Qualities of Top Managers Critical To
Success...
Financial Management System...
Case in Point
Venture Investing by Nortel
Telecom...
|
