about ZENCubate

ZENCubate jumpstarts small business growth by acting like “venture capital” for main street — only without most of the mess. if you’re not familiar with how venture capital works, here’s a simplified overview.

on one side of the equation are investors — people or organizations who pool their money in a common fund to be invested for profit.

on the other side of the equation are portfolio companies — independent businesses that sell an ownership stake in their companies in exchange for cash.

in the middle of the equation is the fund manager — an expert at identifying and cultivating promising investment opportunities.

in addition to money, the best-performing funds provide their portfolio companies with an array of resources and expertise that maximize their likelihood of success. it’s sort of like stacking the deck, and represents one of the better features of venture funding.

but then there’s the exit. venture funds recoup their investments (and hopefully make some money, too) by selling their ownership stakes in portfolio companies. from the founders’ perspective, this is where things often start to go awry. this is because the things an investor wants and needs for a successful result doesn’t always match up with their companies’ best long-term interests or those of its founding owners.

for a variety of reasons, the venture fund model simply doesn’t work in the small business arena.  so we decided to create one that does, emphasizing its best features while minimizing the worst.

first, as in the venture world our model employs a “fund manager.”  that’s us.  main street ventures initially evaluates all opportunities, plus provides our investors and portfolio companies with a proven framework for creating small business success.

second, we assemble a group of 7 “investors.” rather than pooling cash, however, our investors pool their deep expertise in marketing, sales, finance, operations, law, technology and people management (human resources).  in addition to being the “fund manager,” we also serve as the lead investor.

finally, we select a group of 10 “portfolio companies” in which to invest. over the course of 18 months we’ll actively work with each company to design and complete 2 – 3 key initiatives aimed at rapidly accelerating business growth. approximately $60 – 70,000 of services will be provided to each company during the course of this work, with our investors financing 85-90% of the cost.

companies repay the financed portion of our investors’ services by sharing a percentage of their top-line revenue growth (sometimes coined a revenue royalty or revenue sharing arrangement).  if a portfolio company doesn’t experience growth (for any reason), repayment will never be triggered.

of course, there’s a little more magic to the machinations, but this is essentially how things work.  if what we’ve described so far piques your interest, we invite you to submit a request for more info or contact us directly.