Entrepreneurs




“To be successful, you have to have your heart in your business, and your business in your heart.”

     - Thomas Watson

Criteria

Core Team

At least one member of your team should be a "Domain Expert" in your core technology, product/service, or target market.  Being able to reference that expertise in demonstrating how and why your business will succeed is an important characteristic we look for.   Prior start-up experience is not a requirement.  More important is your team's passion for your product/service and ability to transfer that passion, understanding of the personal investment required to making the company successful and commitment towards making that happen.  The team must be coachable and willing to cede some control and decision-making authority to outside investors.   As we will be working together as partners, your team's credibility and integrity is essential. 

Innovative Products/Services

We look for innovative companies.  We believe it is the best way to gain and maintain competitive advantage.  The concept behind the innovation should be proven and demonstrable; confirmed with data or by outside experts.  We prefer disruptive and unique need-to-have products and services over nice-to-have ones.  While we prefer to invest in first-of-a-kind new ideas, we will consider significant enhancements to existing products/services.  Note that we do not invest in research projects without a clearly achievable path to commercialization.

Market Opportunity

We look for technology/solutions that address significant, well defined problems in their target market, and where the value proposition can be easily articulated and no significant behavioral change on the part of the customer is required for the business to succeed.   Ideally the target market is currently, or is quickly growing to be, $100+ million, and your company has a strategy to capture a significant share within 5 years.  Other market factors we consider include industry structure, barriers to entry, customer switching costs, competitive landscape, behavior of incumbents, etc.

Growth Potential

We prefer to invest in companies that can grow revenue quickly and efficiently scale to meet those requirements.  You will get a more positive reaction if you can clearly articulate and back-up how you will achieve your 3-year financial projections.

Competitive Advantage

Your company should have proprietary features or attributes which distinguish it from potential competitors or provide strong barriers to entry which prevent other companies from capturing your customers.  Examples of such attributes include intellectual property rights, exclusive business arrangements, key personnel, first-mover advantage, etc.  We prefer companies with the potential to dominate their well-defined niche.

Growth Stage

The company should have at least a working prototype which can be used to demonstrate the need for it and its acceptability among potential customers.  We prefer early-stage companies whose products are either nearing completion of development/testing (pre-revenue) or in the early stages of market roll-out (early revenue).

Lean and Scrappy

We prefer investing in cash-conscious, lean, ambitious businesses.  Ideally, the founders we partner with have initially boot-strapped their business before deciding to dilute their equity in order to benefit from an increase in capital, hands-on experience and advice.  Preference is given to companies where founders/friends/family capital has already been extensively deployed and we are the first outside investors.

Use of Funds

Invested funds must be used to accelerate the company's achievement of key milestones that increase the company's value.  Typical use of funds include completion of product development and testing, patent filing, product launch, customer acquisition and sales expansion, etc.  Ideally, the funds will be sufficient to achieve profitability and cash-flow positive positions.  We do not fund the pay-down of existing debt.  Our investments typically bridge the gap between seed and acquisition or seed and VC financing.

Return On Investment

Investing in early stage companies is inherently risky.  Roughly 45% of all investee companies fail. Another 45% of investee companies struggle to maintain relevance, leaving the remaining 10% to generate a profit for investors.  Our members prefer businesses which can credibly articulate a strategy to achieve at least a 10x return in 5-7 years.  Companies that can achieve these goals without another round of funding are generally given preference.

Valuation and Exit

Founders should have a reasonable basis for valuation and a sense of the range of possibilities as to how much of the business they are willing to share with new investors.  Preference is given to companies with an articulated and credible exit strategy.   Typically, we look for valuations well below $3 million, from as little as $100k.  It takes unusual situations (e.g. issued patents, existing revenue, demonstrated growth, exceptional management team, etc.) for us to consider valuations higher than $1.5 million.

Changing the World

If you sincerely believe your idea or concept will "change the world" in a significant way others would agree with, disregard all of the above and contact us.