InLab Ventures, Based in San Diego and Orange County, Pursues Alternative VC Path
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an “enhanced due diligence process” for candidate companies that emphasizes a quantitative, scientific, and objective assessment. The firm says its “Venture Capital 3.0 lab-based process” was validated last year when the law firm of Wilson Sonsini Goodrich & Rosati and Hitachi Consulting used it to analyze the business plans of 10 venture-backed companies launched between 2000 and 2003. InLab says its process correctly forecasted the seven-year business and investment outcomes of all 10 companies.
Another key aspect of InLab’s approach calls for significantly increasing the number of investment opportunities. The basic premise is that picking 20 investment deals from a field of 2,000 candidates represents a much higher quality of deals than selecting 20 deals from a pool of 200 potential opportunities. To increase the number of opportunities, Doyle said InLab invested millions of dollars to develop news media capabilities, including a mobile studio truck, as part of its integrated marketing services group. Through a partnership agreement with Demo, Doyle says InLab’s media crew attends every Demo conference and formally interviewed executives from every company that presented. InLab provided a similar service during the fourth annual “quick pitch” event in October, which was organized by the Tech Coast Angels’ San Diego Chapter.
“Demo looks at 2,000-plus companies a year, and we get access to their entire deal flow,” Doyle says. “We get tremendous value out of the way we interact with these companies.”
Moreover, Doyle says InLab Ventures’ marketing group promotes the interests of the firm and its portfolio companies through a website that includes in-house news broadcasts, a magazine, events, events calendar, and “The Entrepreneur Challenge,” a competitive online social media platform for attracting entrepreneurs. Naturally, the firm also provides marketing services for the portfolio companies.
It is indeed a different approach. All that remains now is for InLab Ventures to show that its approach works, and Doyle said that’s coming too. San Diego-based Channel Islands, an inLab’s portfolio company that develops software for cable TV set top boxes, is under contract to be acquired. He predicts that two others are within 12 months of similar buyout deals.