Some Visibility into Thinktiv’s Strategy

We had some exciting news that hit the wire yesterday; I think it is a great opportunity to offer an update on Thinktiv’s expanding venture acceleration model.

We have always viewed ourselves as more than a “design firm” or services company. A few days ago, I published a manifesto of sorts on this topic. In summary, when we work with customers, our focus is not on tactical projects or deliverables. It’s always on the asset value our services are capable of creating, how we can maximize it and in turn, maximize the value that the market assigns to our customers’ businesses.

The essential question is: “As the CEO of a startup, which is more valuable – $100K in cash or $100k of human capital that delivers vastly more asset value in the form of new products, distribution channels, or revenue streams?” We think it’s the latter and so do our customers. This insight led us to realize that our ability to accelerate businesses could actually be applied as a premium form of investment capital – capable of creating aggressive gains in market traction and >10x the asset value per dollar than traditional invested capital (i.e. cash). This worldview was genesis of Thinktiventures, our equity investment program, back in 2006.

Since then, we have methodically put this idea to work. For certain clients in the right markets with the most compelling opportunities for venture acceleration, we’ve taken equity positions in lieu of cash for a portion of our services rendered. Using our approach, we’ve assembled an outstanding portfolio of these “earned equity” investments — with holdings in roughly a dozen emerging market leaders like Socialware, SharesPost, OtherInbox, Prysm, RecycleMatch, Pricelock and others.

Now we are taking Thinktiventures to the next level. Early this year we announced our acquisition of Triggerbox. Triggerbox was a strategic advisory firm, angel investment vehicle, and longtime Thinktiv partner. As part of the integration of the two companies, Triggerbox founder Steve Waters joined us as Thinktiv’s Chief Strategy Officer and the Managing Director of Thinktiventures. With that acquisition, we saw the opportunity to extend our “acceleration capital” model to larger, more strategic investments, with Thinktiventures acting as the “lead” investor.

Again, these investments will be optimized around the creation of asset value — which means they may not look like traditional venture capital opportunities. We won’t be chasing after the most hyped new startups. We won’t be making 100 bets with the hope that a handful will pay off. We’ll be looking for opportunities where focused investments of acceleration services and financial capital can create “non-linear” returns in asset value. These opportunities are likely to take one of three forms:

1. Powerful ideas that are too complex or require too much investment for early-stage incubators.
2. Companies with strategic assets in great markets but need an aggressive shift in distribution strategy to realize their potential.
3. Large companies with valuable assets that have hit a plateau in their growth — and that now sit languishing in another venture capital portfolio.

I’m thrilled to report that yesterday, the first of these investments — QuickGifts — was announced. When we met them a year ago, QuickGifts was a 9-year-old startup providing gift card e-commerce and rewards currency solutions to local merchants and corporate clients. Bootstrapped by founder/CEO Stacy Young, the company had a tremendous base of strategic assets in the local commerce space, but limited distribution, and a pressing need to revitalize both its market strategy and visual brand.

QuickGifts slotted nicely into the second bucket I described above. We led a group of several investors in a $700K+ infusion of new capital, combined with a substantial investment of Thinktiv acceleration services. We worked with Stacy to implement an aggressive partner distribution strategy, and completely transformed the company’s market position, brand identity and end user experience. Now, as the company (re)launches, it is poised for hyper-growth and category leadership in an enormous market. It’s the perfect example of what we’re trying to accomplish as investors, and we’re incredibly excited about QuickGifts’ future.

We’ll publish a more detailed breakdown of the QuickGifts opportunity shortly, but I wanted to give everyone the proper context in advance. We look forward to sharing more exciting Thinktiventures news in the weeks ahead.