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How these new companies benefit CSI Managers

Why should you care about the fund?

At some point, you will have a business venture that is forecast to have an attractive IRR but significant short-term losses. VMS Ventures allows your business to invest into these new initiatives and business ventures with minimal negative consequences for your profit and loss statement. 


If the business venture is a success, then you will receive the right to invest in future financing rounds. This allows you to retain the upside of a high-growth venture investment while minimizing the early-stage risk typically involved. Once there is minimal risk, then your team can offer to acquire this business venture like any other acquisition. The above investment mechanism can also be used to make investments in external business ventures. This structure also allows your business unit to retain high potential employees, as they will still be connected to your team. These employees will be challenged in new ways and given equity compensation. 


Entrepreneurial employees should also be interested in launching a business venture and partnering with the VMS fund. We insist on founders owning a significant equity stake in the new business venture. By eliminating unnecessary bureaucracy, the fund aims to let the founders build their business venture and team in their own way. This is also a chance for your employees to utilize their knowledge of a niche vertical market for their own business venture, Constellation Software and VMS Ventures focuses on building great enduring businesses. We do not sell our shares and want all investors to receive returns by building a great business and reaping the rewards from dividends. 


A good investee prospect for the fund will have:

  • passionate team willing and able to build a great software product. 
  • An idea in a niche market or vertical where Constellation Software operates.
  • Opportunity for $10MM in annual revenues within 5-10 years.  
  • A sponsoring Constellation Software business unit.


Why will employees be interested in launching a venture?

  • Investee employees will own a significant equity stake in the new business.
  • They will be able to devote their full time to the new venture.
  • The employees will have virtually no bureaucracy with which to contend.
  • They get to build the business in their own way, hiring their own team.  


What is your downside as a sponsor?

  • Loss of (personal) control of the sponsored initiative. You'll still have clout, but it will be diluted.     
  • You'll be losing some loyal, intelligent, hardworking organic growth-oriented employees to the new venture. If they were happy and satisfied and would have stayed with you forever, your BU is going to be worse off.


Email karl.schabas@vmsfund.com for questions or information! (All information stays between you and Karl).


Investment criteria

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