As a general guideline, Zone Ventures is seeking seed and first round investments in information technology companies of between $1 million and $2.5 million. These companies must have the potential to achieve strong profitability and sales, as well as, large market capitalization, thus generating substantial returns for its shareholders.
Zone Venture's model company would consist of a team of success-driven entrepreneurs and managers, plus a proprietary product line in a $500 million growing market. The company's product must have the potential of capturing a large market share and have a well-defined channel for selling into the market.
Our criteria is accorded to differing weights from situation to situation, but the one to which we most consistently give the heaviest weight is the management team.
Zone Ventures has no fixed requirement or formula governing the amount of ownership we receive for our investment. Each investment is different and must be tailored to meet the objectives of both the company and Zone Ventures. Generally, due to the inherent risky nature of venture capital investing, Zone Ventures tries to structure the investment to achieve a return of multiple times its original investment.
Zone Ventures does not require a controlling interest in a company but usually requires a seat on the company's Board of Directors (e.g. when in the lead investor role).
We usually structure our investment as preferred stock with conversion rights into common stock. We also favor a simple investment arrangement that does not require the application of a formula or revaluation based on future performance. Zone Ventures seeks to align our economic interest as closely as possible with management's interest.