A “Capital Efficient” Alternative

Highly capital efficient, high growth, successful companies seem to have become extremely rare in the age of the Unicorn.

The fabled Unicorns that have become the symbol of both success and excess in the venture capital markets mostly have big burn rates and thus are voracious consumers of venture capital and venture debt capital.

Apparently there are 140, $1B plus valued Unicorns who have raised 174, $100 million + sized rounds in the past 9 months.

But there is another strategy to building really successful, venture backed companies. The capital efficient strategy includes some very notable (although fewer) examples of big exits such as Indeed, Veeva and even eBay. These companies raised very little capital and pursued a low burn model and became profitable quickly.

The capital efficient model is even more rare than the successful Unicorn model and is certainly the confluence of very unique and rare market dynamics along with an extraordinary focus by the team on the customer and building a brand for that customer need.

We try hard to find these types of opportunities and have the fortune to have been associated with a number of these. One such company that is beginning to prove it is on a path to achieve huge success on very little investment is Ticketmanager.com.

Ticketmanager.com just closed a $20 million Series B after only raising $5 million since inception and achieving profitability on less than this $5 million. We seeded the company and following that first investment I could tell that the founders were a different type of entrepreneur. They are lead by Tony Knopp, who grew up in Silicon Valley where his dad was an early employee at Apple and Cisco. Tony has the valley in his blood but he runs his company very differently. He operates almost in the same mode as bootstrapping. He didn’t want to spend the money we invested and he refused to spend ahead of their cash. However, that didn’t mean they weren’t innovating and they certainly were growing. Fast forward 5 years, and they are now the absolute, hands down leader in their market (which is a $20 billion software and transaction market). Their software platform enables all corporations to manage, distribute, track and measure their live event investments across sports, music, conference and other events where customers and company officials meet to entertain and do business. If you work at a big company and have tried to take customers to a sports game in the company suite, think about how inefficient, opaque and poor the process is to get the tickets, to get the tickets to your customer, to manage the event and to then track how the event performed with regard to your business goals.

Ticketmanager’s success is the result of the team, lead by Tony, being incredibly capital efficient while being incredibly focused on their customer and creative in how they have gone to market. I won’t give away their secrets but suffice it to say they have been very focused on a single point of pain for their customers and they have leverage the entire software and partner ecosystem in a variable cost positive way to grow without having to invest excessively ahead of revenue.

Now they have raised a good sized growth round to go after the opportunity more aggressively which the team and the investors feel good about because the company knows what to do, and what not to do, in order to invest the Series B intelligently and dominate this market completely.

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