Longworth: Entrepreneur FAQ

1. In what market sectors does Longworth invest?
2. What is Longworth’s typical investment size and stage?
3. What factors do you take into consideration when making an investment decision?
4. How does Longworth generally find investment opportunities?
5. How does Longworth add value to the companies in which it invests?
6. What other VC firms does Longworth co-invest with?
7. Is Longworth always the lead investor?
8. Does Longworth require a board seat?
9. In what geography does Longworth invest?
10. When was Longworth founded?
11. What is the best way for me to get a meeting with Longworth?

1. In what market sectors does Longworth invest?

We invest in emerging companies in three of today’s most dynamic sectors of information technology:

Software — Innovative companies continue to create software solutions that enable corporations to drive operational improvement and productivity. Meanwhile, software vendors are bringing to market solutions that deliver significant new benefits to small businesses and consumers. Corporations are investing to improve their business-critical IT infrastructure — to make it more secure, more measurable, and more efficient. They are investing in the next generation of application software to generate significant competitive advantage and realize the business benefits of their prior IT investments. Small businesses and consumers are enjoying the availability of a whole new set of enterprise-class software solutions that have been designed, packaged and priced to meet their unique requirements.

Internet — Over the past ten years, the Internet has established itself as an essential channel for businesses and consumers. It delivers a tremendous array of communication, information, commerce and entertainment applications. Companies continue to develop innovative, high-value new products and services that leverage the broad availability, openness and interactivity of the Internet.

Content — Information is power. Innovative companies are leveraging the power of the Internet and related technologies to create and deliver rich information services that support business decision makers and individuals.

2. What is Longworth’s typical investment size and stage?

Longworth typically leads an investment in a company’s first or second round of funding. We invest $1-3 million in that first round and, if appropriate, recruit other top-tier investors to syndicate additional capital. We reserve sufficient funds to support your company in future financings.

We are creative and flexible about investing in companies that fall outside these general criteria. For example, we recently led a seed stage investment after agreeing with the entrepreneur that some additional market validation and product development was appropriate before the company began to scale. Likewise, we also partnered with an entrepreneurial team to recapitalize and restructure an established business that is poised for strong growth.

3. What factors do you take into consideration when making an investment decision?

We look for four key elements when evaluating a company:

Large Market Opportunity – We only invest in companies that have the potential to be market leaders in a sizeable market and to yield superior returns of five times or greater to investors. In general, total market opportunity must enable the company to grow to more than $100 million in annual revenue.
"Unfair" Competitive Advantage – Every company has some competitive advantages, but the most successful ones become leaders with an "unfair" competitive advantage such as crucial intellectual property, strategic distribution partnerships, and early marquee customers and sales momentum. We do not invest in companies that will just run a good race. We invest in companies that have a significant head start.
Strong Core Management Team – Early stage companies rarely have a complete management team in place. One of the most critical ways we can help portfolio companies achieve success is by helping to build management strength over time. We look for passionate, intelligent leaders who have demonstrated success in companies of similar stage, market, technology, etc.
Clear Customer Validation – Customers ultimately determine the success of every company. We focus our efforts on understanding the level of customer commitment — whether it’s strong revenue growth and a deep sales pipeline or strong interest from early adopter target customers.

4. How does Longworth generally find investment opportunities?

Our broad relationships with entrepreneurs, senior operating executives, co-investors and others active in the technology community are our best source of new opportunities. As an example, we’ve assembled a world-class team of technology entrepreneurs and operating executives as part of the Longworth Executive Council. In addition, we invest heavily in researching key technology and market sectors to identify the most exciting emerging companies. Because of our strong research focus, we know a lot about your market and competitors when we invest. We also hear about opportunities through entrepreneurs who submit their business plans.

5. How does Longworth add value to the companies in which it invests?

We can add the most value by helping build management, providing access to customers and partners, and leveraging our experience. As an active and trusted advisor, we’ll partner with you to help you build and grow your business without getting in your way.

Our talented team of investment professionals helps our portfolio companies in numerous ways. Obviously, we support your capital needs over the life of the company. We also help to identify and recruit senior management and we work hard to open doors to customers and partners. In addition, we invest significantly in primary research to actively understand your market and your competitors — to support you in your business strategy and execution.

6. What other VC firms does Longworth co-invest with?

We have strong, current relationships with leading venture firms. Some of our most recent partners include: Atlas Venture, Bain Capital, Battery Ventures, Charles River Ventures, Columbia Capital, Commonwealth Capital, Edison Venture Fund, FA Technology Ventures, Meritech Capital Partners, Morgan Stanley Venture Partners, North Bridge Ventures, Oak Investment Partners, PA Early Stage, Prism Venture Partners, T.D. Capital Technology Ventures, Trident Capital, Valhalla Partners and others.

7. Is Longworth always the lead investor?

We are the lead or co-lead investor in most cases, but we will join other investor syndicates in the right opportunity.

8. Does Longworth require a board seat?

As an active investor, we generally expect to take a board seat.

9. In what geography does Longworth invest?

Our primary territories are New England, New York/New Jersey, Philadelphia, and Washington, DC/Northern Virginia. We’ll also invest elsewhere on the East Coast and in cities like Pittsburgh and Chicago.

10. When was Longworth founded?

Longworth was founded in 1999.

11. What is the best way for me to get a meeting with Longworth?

Please check out the information on the Contact Us page or submit your business plan to us via email.