“It’s a Good Thing!”

I love Martha Stewart. Not the person specifically (I've never actually met her) but the brand and business she has built. An extremely talented and successful entrepreneur, she's all about inspiring and engaging consumers with unique content and beautifully designed, high-quality products. She calls her how-to tips and beautiful creations "Good Things." Take ordinary paper bags, for example. Add some stencils, glue, cardboard and a candle and you have a scary message lantern. Brilliant! Last week my colleague Becca Braun published an article on PrivateEquityCentral.net that describes the relatively new phenomena that are Venture Development Organizations (VDOs) and how they can be helpful to private equity investors. What is a VDO, you ask? To quote Martha, It's a Good Thing!  While VDOs exist to promote economic development in a region, they also succeed, through the combination of technical assistance (i.e. person-hours) and equity investment, in wringing out the risks inherent in very early-stage companies. VDOs (such as JumpStart) spend their money to move companies along the commercialization path from Idea Stage to Incubating and then to Demonstrating. Tasks often performed with the use of VDO investment dollars include performing market studies and/or R&D, building prototypes, securing beta customers and recruiting team members. As such, VDOs are a great place for venture capitalists to look for deals; most VDOs have large portfolios (Innovation Works has 100+ portfolio companies and JumpStart has 40+ portfolio companies) and can pick out the most relevant ones for your fund in the course of a short conversation. Think of VDOs as the "scrubbing bubbles" of the venture community - "We work hard [with Idea Stage companies], so you don't have to." I'm guessing even Martha would agree, VDOs are a Good Thing! Lynn-Ann Gries is the Chief Investment Officer of JumpStart Ventures. She previously worked in the investment banking departments at both McDonald Investments and Smith Barney (now part of Citigroup), and in the sales and trading area at Morgan Stanley. She received her MBA from New York University's Stern School of Business and her BA in Economics from Smith College. She currently serves on the board of the Fund for the Future of Shaker Heights, the Great Lakes Science Center and Summer on the Cuyahoga (SOTC).