The 5 economic moats of a venture capital broker in fundraising are time saving; quick result; network effects; intangible assets and efficient scoping and investment analysis. These 5 economic Moats are one type of competitive advantage that deliver rewards to founders seeking to raise funds. They’re more durable than other competitive advantages. Short-term advantages are useful, but they shouldn’t be mistaken for economic moat. https://www.slideshare.net/BrianLaungAoaeh/economic-moats-innovation-footprints
Economic moats of a VC Broker are difficult to express quantitatively because they have no obvious dollar value. But are a vital qualitative factor in fundraising success or failure. In this article, we will discuss the 5 economic moats of a venture capital broker in fundraising. And why moats are important in today’s fast growing technological innovations.
Loan offers an analogy. A short term or long term loan to a small scale company provides a capital boost. It is easy to get a loan. And it gives the company the extra capital they need to make more profit. But those profits will have to cover the interest repayment before the end of the amortization period.
An equity investment, in contrast, is difficult to get. It takes a lot of time to convince investors to finance your venture. But it is better than a loan. It is less risky for the founder or business owner. The extra capital infusion is offered in exchange for the founder’s equity shares. And will be used to grow the company for a longer period of time. It delivers year after year of new development and company expansion. Loans are competitive advantages. Equity investments are moats.
Time Saving Economic Moat in Fundraising
Let’s look at an example. Suppose you have decided to make your fortune by running a lemonade stand. You realize that if you have extra capital, you can increase your production by 100%. And reduce expenses by 50%, allowing you to undercut the prices of competitors.
Your low prices lead to an increase in the number of customers buying lemonade from you (and not from your competitors). As a result, you see an increase in profits. If you raise the capital very fast, you will have a longer period of time to get large profits. This is before your competitors notice your method and employ it themselves. Therefore, in a long period of time, your large profits would grow. It will be reinvested, and the local lemonade industry would experience rapid market expansion.
However, suppose you use a venture capital broker that allows you to get the investment capital in less than 24 hours. And you use the capital to grow your business and develop a patent technology. It will allow you to get 30% more juice out of the average lemon. This would have the same effect of reducing your average cost per glass of lemonade.
This time, your competitors will have no way of competing with you or duplicating your methods. As your competitive advantage is protected by your patent. In this example, you have used the economic moat of a venture capital broker to get your company’s economic moat. Which is the patent that you hold on to your proprietary technology. Time saving moat ensures speed to market (first to market) advantage.
Quick Result Economic Moat
What if your thermometer only gave you a reading two days after you took it? Or your car’s gas gauge show the fuel level from a week earlier?
You would make ill-informed – and even counter-productive – decisions because that information was outdated and no longer relevant to your current situation. That’s because measurement is only actionable when it’s timely.
The same holds true in fundraising. Too often, measurement of the impact of the fundraising process has lagged well behind the competitors and investors themselves, as data on key business outcomes like investors focus and Return on Investment (ROI) are not available until many weeks or months after you have applied for a request for funding. Rather than using a Venture capital broker to adjust and improve a fundraising in-flight to drive better funding results, founders are forced to make-do with slow, out of date results that don’t keep pace with the demands of the investors.
To address this industry-wide challenge around timelines, I am delighted to introduce to you Quick results Moat of a VC Broker that includes Moat Outcomes, an always-on ability that will change the measurement game.
With Moat Outcomes, causal measurement becomes more agile and responsive, providing founders with real-world funding results from their request campaign in as little as ten days.
Network Effects Economic Moat
Imagine a scenario where each additional entity in a Venture capital broker’s network, whether Angel, VC firms, or even companies or financial institutions, contributes not only to its scale but also to its inherent value. This is the crux of the network effect—a force that magnifies the allure and functionality of a VC Broker with every new member. As more participants join the network, the overall utility and attractiveness of the offering intensify. This, in turn, encourages and improves the founders fundraising process.
In the dynamic landscape of business and investing, the term “network effect” holds profound significance. At its core, the network effect is the embodiment of a VC Broker’s ability to elevate its worth exponentially as its network expands—a phenomenon that reshapes founders fundraising process and redefines market dynamics.
Network effect is a crucial consideration for founders seeking to navigate the complex world of investors community and financial industries. A strong network effect can infuse a founder’s fund request with resilience and differentiation, erecting formidable barriers that make replication by competitors a daunting task.
This very attribute is what captures the attention of investors. By unravelling the layers of this potential, Venture capital brokers empower founders with insights and assistance that enable them to make more informed decisions in their pursuit of investment success. A harbinger of competitive advantage and sustainable growth.
Intangible Assets Economic Moat
Although not always easy to quantify, intangible assets are one of the primary sources of strong competitive advantages of a VC Broker and a key source of economic moats. Intangible assets can include laser-focused relationship and connections, and business methodologies that help founders seeking to raise funds.
Intangible assets are non-physical assets that bring value to a founder that is fundraising but lack a physical presence. It play a crucial role in driving many companies’ success and establishing their competitive advantage.
Let’s look at an example of laser-focus relationship as an intangible asset. At a recent investor day, Clark Christopher shared that the “overwhelming majority” of his contacts picks up his call or replies to his email and messages within 10 minutes. That network of connections is economically out of reach for any would-be business owner or founder over a reasonable timeframe. The network also allows Clark Christopher Venture Capital Broker to help founders seeking to raise funds more effectively. By being a more convenient easy to reach source to acquire funding, especially when a fund request or project fundraising is immediately needed, doesn’t require publicity or urgent.
As for the broker that fuels both fundraising and business planning, Clark Christopher, Venture Capital Broker shared at investor day that it took his dad over 80 years to build out and 35 years to add more and modernize the process of engagement. A select group of brokers has the financial wherewithal to replicate that asset; none are laser-focused on helping founders of all kinds.
Efficient Scoping and Investment Analysis as a Moat
There is growing interest in how different forms of knowledge can strengthen the fundraising process for founders and business owners. Additionally, Efficient Scoping and Investment Analysis are increasingly needed to design effective support on knowledge utilisation in the process. It is a key pillar of a venture capital broker in business rating. A VC broker uses efficient Scoping and investment analysis to conduct research and rate the quality of a business. The research proves whether a project has higher return on investment capital (ROIC). It implies adeptness in capitalizing on investments, signaling competitive advantage and effective resource utilization for returns .
All over the world the use of scoping and investment analysis has increased exponentially largely due to the ease with which information is captured, converted to digital format, stored and analyzed for the extraction of knowledge.
Consider the case of a small business. It might be a restaurant, a hardware store, a hair salon or a flower shop. The owner, Elizabeth Baron, is also the manager and she keeps financial and human resource records using standard off-the-shelf small business software.
Every business day, sales and expenses are recorded in the business database. Where possible, information about the clients is also stored: names, addresses, phone numbers, email addresses. Relevant information about suppliers and employees is collected and stored. The database is encrypted and backed up off-site automatically at regular intervals.
Information about the business is also recorded by service providers such as the banks and credit card companies, the landlord and the utility companies. These service providers send monthly digital itemized bills to the business where they are stored in the database for future reference.
Now the business uses all this information to compile a variety of monthly, annual and historical reports to manage billings, orders, payments and marketing in a semi-automated fashion. Periodically the manager gains knowledge and finds opportunities to increase sales, reduce costs and generally improve efficiency. Ms. Baron completes her annual income, sales and property tax submissions using software that draws on her business data. https://christopheclark.com/