Case Studies | August 10, 2017
[CASE STUDY] Corporate Venture Capital Advisory
A major enterprise client with operations in airline maintenance, repair and overhaul (MRO) identified a unique opportunity to invest ~$6M into an emerging technology venture that would become the foundational platform to enabling proprietary, new workflow management solutions for our client. With a short timeline to execute the deal and no internal venturing team, the company engaged TechNexus Venture Collaborative to manage and advise the deal process from end to end.
First, the TechNexus venture team worked closely with the client to confirm the strategic fit of the venture and business case for investment. The team evaluated the potential impact of the venture’s solutions if integrated into the client’s business and assessed the venture’s technologies compared to other ventures with similar solutions. Second, TechNexus conducted diligence on the venture including a financial assessment and valuation as well as assessments of technical and managerial talent. Third, TechNexus structured, negotiated and managed the deal.
For this deal, TechNexus secured a strong equity stake, favorable protective provisions and control terms, rights of first refusal for further financing and an option to acquire the venture (at a future date) at a fair valuation.
Most of the favorable aspects of the deal had not been being discussed or demanded prior to TechNexus’ involvement. But with TechNexus’ management, the client obtained a materially more favorable deal, which both optimized financial risk and created significant strategic optionality. The resulting structure and terms of the deal enabled this investment to become a foundational element of the client’s strategic growth plans.