One of the biggest challenges in modern day business basics is creating a successful recipe for a great business venture and a sustainable enterprise. Even if you look at 2016 that is almost on the verge of ending, you will notice the hundreds of entrepreneurs who tried their luck in terms of making it big in the business world. However, there are only a few who actually experienced success and came out of it as winners with a formula that just doesn’t give a one-time spike, but creates a concept that can yield returns many times over.
In this context, there is one name that would perhaps come out as not just a great entrepreneur, but also someone who is practically at the crossroads of creating a sustainable business concept and even paving the way for a brand new approach in day to day business. It is an initiative in not just conceptualizing a formidable business front but also questioning the rules of business that is being done thus far and creating a comparable platform for conducting business a bit differently and steer the science and art of entrepreneurship in an entirely new direction.
Yes, we are talking about the quintessentially smart, handsome and hands-on entrepreneur, Rami Rahal, the founder of Blue Cloud Ventures. He is the co-founder of Blue Cloud Ventures. Essentially this New York based growth stage firm is focused on co-investing in companies that provide software as a service along with top VCs in the field today. At just 25, Rahal has been instrumental in raising over $65 million across two funds. He has managed to rope in nearly 30 software CEO and even high net worth individuals. His fund has an investment in many software majors like Tapad, Cloudbees, Vidyo, BTI System, JazzCo, Lattice Engines and the like.
The Blue Cloud Ventures Mantra
The core idea that is driving the entrepreneurs leading Blue Cloud Ventures including Rahal is the fact that they are betting big on future, they are identifying successful and fast growing companies in areas of cloud software and mobile application. Being part of over 150 M&A deals; the Blue Cloud team has pretty much its pulse on the future. Right from the creation of Blue Cloud Ventures to its present growth, the idea has been to identify the gaps and inefficiencies in the growth and late stage funding markets.
Currently, the market conditions are such that while early start-ups have many channels of sourcing the key funding, the companies that are in need of late stage funding have a very limited option. Late stage companies most times frantically in need of the last round funding have to fall back on traditional investment approach and look out for options from existing investors who may or may not be keen to further extend the extent of their investment in the company. The result often is that these companies which might have got a flying start are suddenly left to scampering on their own and compromise quality to attain the right marriage between expenses, growth and future.
With most last stage fund sizes being too small and these companies requiring a relatively larger amount of fund assistance, Rahal and Blue Cloud Ventures found this as a great option to capitalize on. They conceptualized an option that had a different delivery model and could identify a solution to address this growing requirement. They decided to provide the last stage companies with just the right type of financial alternative by
- Keeping a flexible fund limit
- Flexible exit horizon
- Speeding up the process
- Creating board representation.
All these measures are aimed at creating a viable financial option for companies that suddenly feel the crunch and in a hurry. This kind of a late-stage funding assistance ensures that companies do not have to go through the entire process of traditional fundraising which is both time-consuming and also extremely resource-heavy. The cardinal aim of this venture is to cut down the fundraising time for companies that need fund well into their development chart and ensuring their efficiency and progress is not hindered as a result of the fund crunch.
The expedited due diligence model, the extensive network of growth stage funds and streamlined processing ensures that companies with the need for the fund can easily seek help and get it as well at Blue Cloud Ventures. This approach is quite contrary to the traditional fundraising option, which was thus far the only alternative at this stage of growth chart of a company. Traditional fundraising options at these crucial junctures often act more of a hindrance rather than being the growth enablers for companies especially due to the long due diligence process and indirect decision making keeping into account many stakeholders in the process.
Blue Cloud Ventures seeks to negate not just the ground rules, but under the guidance of co-founder of Blue Cloud Ventures, Rami and his team, they are more like the messiah for companies frantically looking for means to get through the last leg of their entrepreneurial struggle in an effort to create a long-term business venture. The direct access to a wide network of VCs ensures that they are able to stick to the fast delivery model that constitutes the core of their efficiency and creativity in bringing forth a sustainable model that does not yield to the last minute uncertainties.
Another interesting concept that Rami and the Blue Cloud Ventures team are trying to pioneer is the fact that they are stressing on the board seat. Though a co-investor does not typically need one but by creating this, what they are doing is creating an opportunity for the investor to become an active participant in the entire funding and growth process of the company that they are putting their money in. This also means that the investor is no longer a passive partner as we see in most traditional investment avenues but on the contrary, they produce the wherewithal to create an absolutely sustainable long-term alternative.
Challenging Traditional Approach
In many ways, Rami Rahal and his company, Blue Cloud Ventures, is well on the verge of challenging traditional concepts and approach and creating a modern solution to a modern phenomenon, the late stage funding. This is particularly a striking development at a stage when corporate venture capital is rather picking up speed in a phenomenal manner. You can see many large companies taking up the VC route in setting aside funds that can be used as a source of external investment in existing companies as well as start-ups. The software industry particularly is in considerable focus given the fact that they have their pulse on the future and their actions today can well set the tone of future development.
Today several noteworthy tech majors like AMD, Dell and Intel are all looking at proprietary funding and Blue Cloud Ventures is just the ideal gateway to future funding. Corporate venture funds have mushroomed in the past four years and worldwide, the current number of corporate venture funds is significantly over the 1000 mark. It is after all this crucial element of Venture funding, the Ramil Rahal and the Blue Cloud Ventures team are looking at capitalizing with a clear eye on the ramifications in future. So then the question that comes forth is how exactly would this corporate venture funds and the easy access to late-stage funding as Championed by Rami’s Blue Cloud Ventures help in changing the overall structure of investment around us as we perceive it till date?
Well, first and foremost, let us understand that large companies due to their sheer size and slow movement often make product innovation an almost impossible task. Be it pharmaceutical companies, telecommunication or even technological firm, almost everyone which rely heavily on R&D but cannot substantiate the extent of returns from such venture can take advantage of corporate funding. This provides them with a unique opportunity to spend more on R&D without the additional hassle of going through the entire fundraising process and exposing to more risk.
The corporate venture fund as envisaged by Rami and Blue Cloud Ventures become an active source of the fund and ideas as the co-investors get to play an active part in the regular functioning of the company. Needless to mention that this step also opens up the scope for a greater extent of transparency, which works well for both the company as well as investors in terms of ensuring a higher level of accountability. In fact, the brilliance of this move can be well gauged by the fact that corporate venture in last year has accounted for over 1050 investment deals that have a net value close to $20 billion in all.
Data further goes on to reveal that nearly 20% of all deals which together resulted in 40% of the net transaction took the corporate venture route in 2013. The numbers are a clear indicator of a trend they also help identify and emphasize the brilliance of the business model that Rami Rahal and Blue Cloud Ventures have been championing thus far.
The Rami Magic at Play
That said, corporate venture fund, a brainchild of Rami Rahal, Blue Cloud Ventures and his associates is also a wonderful reflection of investment prowess and keen business sense portrayed by this erstwhile investment banker at Madison Park. In his earlier avatar, Rami had worked with a wide range of software, and tech-enabled firms, thereby developing a keen sense of expertise across genres of IT Strategy funding and tech innovation.
This sensitivity and out of the box funding is perhaps a key reason why Rami’s brand of funding has caught on with such amazing vigor across the ranks of companies with their focus on future. You can almost identify the true sportsman spirit of this new age entrepreneur with interest in soccer, martial arts and skiing. An active early stage investor as well, Rami brings in a comprehensive understanding of the entire cycle of business processes. His, this sense of business brilliance, thus adds that additional zing and greater prospects of returns from the funds that he works with.
His free-wheeling and avant-garde techniques enabled him to be a facilitator in setting up many potential start-ups looking for direction and the right nudge from the right corner.
Why Corporate Venture Funds Work?
The account of operation at team Blue Cloud Ventures will clearly highlight the operational efficiency attained through this kind of funding alternative. The fact is that traditional funding looks at utilizing the powers of institutional investors and high net worth individuals to garner funding. However, a corporate venture fund does is to put to use a company’s existing cash reserve to fund a relatively fresh venture by either the parent company or a new start-up with similar interest. This is a major point of difference as this move alone creates a significantly higher pressure on independent venture capital funds to ensure a higher rate of return. So, therefore, it won’t be wrong to look at corporate ventures as more of a type of R&D alternatives aimed at enhancing the business model and also at the same time yield higher rate of revenue for the primary fund.
Another benefit of corporate venture-capital funds is that unlike start-ups, the extent of uncertainties in late stage funding is relatively limited given that there is already an established line-up of customers, brand associates and a credible network of distributors. They also enable a better chain of organic growth coupled with financial returns which work in a mutually beneficial manner through the course of the entire funding process. This kind of association no doubt ensures a greater deal of knowledge and talent exchange between the two companies as well enabling a much higher level if sustained growth momentum in the entire process.
The successful associations by Blue Cloud Ventures be it in Verizon Ventures, Cloudbees, Juniper and a whole line-up of some of the best players in this field goes to highlight the growth opportunity and the overall success rationale of this niche and gap in the entire funding model as we see it today.
The Signals of Shift in Place
Though the advantages are obvious, it cannot be denied that independent venture-capital firms have a significantly competitive edge over corporate venture funds. This can be easily attributed to their speed, flexibility and experience in handling financial needs of companies in a more efficient manner for a longer duration of time While corporate venture-capital firms with high cash reserve might be extending assistance to players in the similar field, venture capital funds have a way of hands-on approach, especially given their independent nature and a relatively unconventional nature of functioning.
While the debate on whose better continues, one of the greatest shift that is being noticed is the fact that next generation of businesses could benefit a lot more with an active participation of corporates. The emphasis on building a sustainable next generation of leaders without compromising on the basic valuations and margin aspect can only lead to lay the foundation of strong business fundamentals. It is well understood how this kind of association also paves the way for a bigger and better idea for the future that is deeply dependent on growth keeping pace with development and advancement in technology.
There is a thin line between brilliant entrepreneurship and average growth of just another brilliant idea. The brilliance of Rami Rahal’s genres of business lies as much in the entire idea that he worked on as well as the execution element of it. We have all seen way too many examples of how a brilliant idea falls flat and ceases to be a great business in the absence of a sound business plan and sound execution of it. The conceptualization and success of Blue Cloud Ventures are perhaps an ideal example of this key fact in absolute terms.
One of the most inspiring quotes of Larry Page, Google Founder, goes on to say that
“Lots of companies don’t succeed over time. What do they fundamentally do wrong? They usually miss the future.”
The truth of this statement could not have been more appropriately borne out than the way Rami Rahal designed his business model. Apart from timing, his ideation and execution appropriately, Rahal’s expertise lies in keeping his gaze fixed on future more than the present. He is perpetually tweaking the operations at present with an eye on what he needs to be prepared for in future.
This, I would say, is the key catalyst that makes him stand apart in a group of hundred entrepreneurs who are trying so hard to ascertain their footing in the business world. In creating a scope for corporate venture fund in late stage funding, Rami also has another brilliant lesson in the word of entrepreneurship. Opportunities do not always knock at your door in perfect well-defined structures. Sometimes, it is in the way we perceive a fact and make good of the opportunity that we can sense. It is about following instincts with our feet firmly grounded that bring in absolute and sustainable success.