November 26, 2001

Considering a partnership with a start-up? The following tips can help mitigate your risk:
By Steve Ulfelder

(Copyright 2001 by Computerworld, Inc. All rights reserved.)
Track record. The management teams at start-up companies always look good on paper, so Michael Carus, chief operating officer and chief financial officer at Jerusalem Venture Partners in New York, says he asks if the team has ever actually produced anything -- at a previous start-up, for example, or perhaps as a team at a large company. "If the nucleus [of the management team] has proven they can bring something from the design phase into the market, it gives us a high degree of confidence," he says.

The future is now. With today's tight budgets, don't sign on with an emerging company unless it can add value to your company's bottom line quickly. "That's different from what it was a year ago, when you could invest in both your needs and your wants," Carus says. "Now you want it clear that there's going to be value creation soon."

Partners count. IT professionals may be smitten by an emerging company with sexy technology. But is that technology marketable? To find out, Jerusalem Venture Partners studies a start-up's strategic partnerships. "If they've been able to convince Cisco that Cisco can make money off their products, they're probably on to something," Carus says.

-- Steve Ulfelder

Copyright © 2000 Dow Jones & Company, Inc. All Rights Reserved.