The investment process consists of four thorough and consistent steps, in place to ensure wise investment decisions:
Quality Management – Management teams must be entrepreneurial and experienced in growing companies in their business area. The founding teams will often need to be augmented as the companies develop, and we foresee playing an important role in identifying and attracting key additions to management. The management team in most investments will have a significant ownership stake in their company.
Market Opportunity – Tera seeks out companies with strategies allowing them to enter a rapidly growing market and establish a defendable leadership position. The forces allowing a new entrant to a market will often be the result of changes to the existing distribution economics, the regulatory structure, or a major change in technology. In each of these cases, the existing market leaders are often constrained in their reaction to the new market landscape by their installed base and by the momentum of their current product offerings, creating an opening for a new company which can focus on the revised market dynamics without having to support an existing business.
Competitive Position – As well as having a potential to dominate a niche market position, companies should have unique and superior products and/or services that provide a defensible and proprietary competitive position. This position can be achieved through intellectual property or other proprietary know-how, superior product manufacturing or delivery systems, or any other aspect which can create high barriers to market entry by competitors.
International Potential – Since market opportunities naturally exist on a worldwide basis in the target industries, Tera will particularly seek companies that have product offerings that can be competitive and effectively distributed in multinational markets. We have a network of contacts which can be helpful to portfolio companies pursuing multinational expansion opportunities.