DCC Growth Fund Investment Guidelines

 

Existing Business: The business should be at least 2 to 3 years old with a core management team, products or services, and annual revenue of $2 to $20 million. After tax net income on a two-year average must be less than $6 million and net worth less than $18 million.

Financing Needs: At least $1 to $3 million of sub-debt or equity financing needed for product development, growth & expansion, strategic acquisition, or change of ownership (generational, management buyouts, etc).

Business Plan: The Plan is the company roadmap and a prerequisite to financing. It is the principal management tool and must be realistic, achievable and contain the company objectives and measurable milestones.

Management Team: The team must be knowledgeable, skilled, financially committed, and have successful experience in the market being pursued.

Products/Services: They must be proven and in continuing demand. Also, the company must have a sustainable competitive advantage.

Market: It must be substantial and accessible to a small company. The market need for the product or service must be definable and of substantial size to enable growth. The company's ability to capture a leadership position by rapidly penetrating the market is key.

Growth: Projected growth should exceed 40% per year. Competitive margins and positive cash flow are the building blocks for growth.

Exit: There must be reasonable expectations of exiting in 5 years through:

  • An Initial Public Offering or secondary offering,
  • Private sale of the company to a third party, or
  • A self-funded buy-out of the Fund's position.

    Exceptions: Other than an exit strategy, the Fund will consider an investment opportunity where there is variation in the above categories provided a compelling reason exists.

    Conclusion: DCC Growth Fund (the Fund) assists privately or publicly owned growth stage small companies by financing the milestones in the business plans and backing management teams. It seeks investments that will yield a generous return without concentrating in any specific industry, although manufacturing, distribution and B2B service are preferred. The Fund also seeks investments in women and minority owned businesses and those located in low or moderate income areas.