- The Washington Times - Monday, July 24, 2000

Wendy Haig started with some skills as an investigator, an observer and a reporter and parlayed them into a fledgling enterprise, which aims to protect the interests of investors, venture capital firms, and start-up companies.
Last month, she founded Global Strategy Corp., a management advisory firm in Northwest that investigates the workings of start-ups for investors and venture capital firms and even the start-ups themselves.
The company is already working with four clients and is in negotiations with six others.
"The money had been so free-flowing, a word we forgot was responsibility to investors," she said.
"You have to have a great idea, a great technology and a great management team, missing one of those components is problematic enough for you not to get the funds."
She said a third of dot-coms succeed, while one third are failing and the rest are breaking even.
"We want to go in and help that middle 30 percent," Ms. Haig said. "If we continue to allow them to simply exist, they will be the next tier of companies we'll see folding."
Her company examines the internal and external structure of the start-ups to detect any problems that might portend failure for the company, such as a weak business plan or lack of diversity in the staff. "We can and will get as deeply involved as necessary," Ms. Haig explained.
"If you have a public company, you have to rely on the SEC filing, but there's nothing like that for a private company," said John Taylor, director of research for the National Venture Capital Association, touting the service.
"The venture capitalist really has a duty to these investors, and there just aren't a lot of public sources to go to."
Ms. Haig's staff will examine the financial books, everyday business procedures, staffing, human resource regulations, issues and the overall business plans.
"Our preference is to become more intimately familiar with all of their workings so there is a unified team left behind," she said.
"It is the goal of our company to get other companies to market faster, to get revenue visibility, to provide stability and longevity."
Ms. Haig said one of the most common problems with start-ups has been a weak business plan.
"When they (problem companies) were very first invested in, they produced plans or methodology that were acceptable then," she said. "The venture capital firms are getting much more picky."
A lack of diversity in age and background is another big problem, she said. "We're seeing so much similarity within management teams that it is common to see, fraternity brothers, graduates of the same alma mater," Ms. Haig explained.
"It's a problem in that chances are you are limited," she said, explaining the lack of differing perspectives affecting generation of ideas.
Global Strategy's advisory service costs anywhere between $15,000 to $30,000, depending on the financial state of the company, for a six-month evaluation. For example, a company on the verge of bankruptcy might only pay $15,000, while another company doing well with a weak business plan or exit strategy, might pay more.
"If you're putting $30 million into an unknown, knowing how that company operates is critical," Mr. Taylor said.
The company has five advisers in the Washington office and about 100 affiliates worldwide from a variety of firms, including accounting and consulting companies, that act as advisers for Global Strategy.
After the six-month evaluation, Ms. Haig will report back to the client, who could be a venture capital firm wanting to know about the start-up it is considering for a second round of financing. Or, it could be a start-up that is not sure what to do next with its growth strategy.
She said most successful companies develop an Internet arm in their growth strategy, while successful Internet-based companies usually end up with brick and mortar businesses such as distribution centers, in addition to their Internet operations.
One leads to the other, she said.
Her company has developed a Web site, Dot-Trauma.com,which will launch later this year. The site will be the company's marketing, merchandising and Internet arm.
E-minrisk is the company's product division, which will offer methodology for venture capitalists who want to monitor the start-ups and their investments.

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