We allocate $1mm to $5mm per company in direct primary growth investments, but selectively do secondary (i.e., non-dilutive) purchases.
Our partnership is rooted in entrepreneurship, having sat on both sides of the table. We believe that entrepreneurship and venture capital can be leveraged to advance the world around us.
Investment Criteria
Company
- Serving business customers in a “core” industry (e.g. HR Tech, Digital Industrials, Retail Analytics and Enablement, Internet Infrastructure - see below)
- Commercial revenues at least $4mm TTM, referenceable customers
- Modest cash burn, could get to break-even with this investment
Transaction
- $1mm to $5mm total allocation from us (potential for sidecar from our LPs)
- Primary investment to support forward growth, with possible secondary (non-dilutive) to take out non-active investors
- Funds used in support of "double-down" strategy based on what's already working
What We Don't Do
- Industries: B2C, Crypto, Material Science, Therapeutics
- Stages: Seed or pre-seed, “beltway” growth rounds, “pre-IPO” secondaries
- Styles: majority or control positions, senior non-convertible debt, revenue or product financing
Our Style & Beliefs
If the criteria above describe an opportunity for us to work together, you probably want to know more about what makes us tick. Below are a few of the enduring beliefs. As concepts they are generally non-controversial, and yet many companies and boards do not adhere to them (us too at times). We hope they inspire the right conversations and lead to productive and fulfilling partnerships.
Customer Economics
Develop detailed knowledge of your customer's economics and how your solution impacts their financial model
Understanding the full (TCO) economics of your enterprise customers is essential to our process as well as a key trait of the companies we like to invest in. We spend a lot of time with our companies trying to get this right so that their product/service can be positioned most effectively to the target customer. If you have a deep understanding of your customer and the value proposition you are delivering to them, we’d love to talk.
Strategic Focus
Chose one end market and execute extremely well
Given we invest only in enterprise tech, there is often the potential – and temptation – to build a “multi-market” platform. In fact, we used to be in love this idea too, thinking that the company and shareholder potential would be multiplied by the number of addressable markets. But experience and most successes prove otherwise: if you’re going to break into a market, you need to build product, marketing, and sales strategies customized perfectly to it. Small private companies do not have the luxury of doing more than one if they want to win. One reason we love to invest in companies that have been around for a while is that they often have a lot of good information for making this choice. We can also help by opening doors to a pretty wide range of marquee corporates in different verticals, so we can be helpful in further learning and validation. If you have chosen your “strategic line” or are ready to do so, we could be a great fit. If the team/board/investors are still focused on exploring (or worse, pursuing) multiple markets simultaneously, then we should discuss this upfront in getting to know each other.
Operational Cadence
Maintain a fast pace of decision-making at the executive and board level through clear and aligned priorities
A common challenge in our companies is operating cadence. One side effect of being in business for a while as a startup is that early “sprint” energy can fade into a more comfortable “jog” that feels more sustainable for the long haul. This is true for boards and investors even more for management teams (if not more so because the former doesn’t have to run the business every day). A view that we’ve come to is that directors and investors need to work with management teams to establish and maintain a fast operational cadence. This doesn’t mean more meetings, but it does impact strategic and operational decisions such as whether to EOL a non-strategic product line or shut down a non-performing sales region so you can double-down on what’s working. We like to do things like zero-base the budget and then reallocate against the priorities – if something doesn’t fit, it’s out. We recognize this can create tension; and we find it instigates some of the most productive conversations. If this is already a topic around your board table, we might fit well around the table. If you’re in “all of the above” mode or have a director/investor group in a deeply passive “wait and see” mode, we should probably discuss before getting involved.
Strong Governance
Exemplify the highest standards of fiduciary duty by constantly working to improve corporate governance
The cornerstone among all our beliefs is the desire to uphold the highest standards of good corporate governance. This includes the basics – informed and attentive oversight of compensation, financials, capital allocation – as well as core fiduciary duties of loyalty and care to balance the interests of all shareholders. In our view, it also embraces the “higher level functions” of how the board operates as a team: diversity of board members and perspectives, culture of transparency and trust among its members, and an honesty with which all members seek and respond to the performance of the business. At the end of the day, the buck stops here – if the board is not operating at full-potential, the company certainly will not. We come at this activism with the humility of being imperfect directors ourselves, and we recognize the need to prioritize efforts in any company or portfolio. But we are clear in our aspiration and constantly work toward it. If you and your board share these values, we will be great partners. Conversely if this topic does not matter to your organization, this is probably our best reason to go our separate ways.
Focus Industries
We invest exclusively in "Enterprise & Industrial" technology companies. In shorthand, you help make the Fortune 500 more "efficient, reliable, or safe." We do not do any consumer or certain segments where success is binary or highly capital intensive. This is where our firm DNA is rooted; we also have no idea what consumer trends are going to be hot next and we leave that to highly capable other investors. We disavow having any genius in the areas below - but we know a few in each who take our calls. More importantly, we believe that making introductions to potential clients is an important way we can demonstrate our ability to add value while evaluating a company's product/market fit and sales cycle.
- HR Tech: Systems that allow companies to attract and evaluate talent; manage, motivate and reward a hybrid workforce; and improve performance, compliance and safety.
- Digital Industrials: Automation and programmatic control solutions that improve the productivity, safety, and reliability of core manufacturing, distribution, and transportation processes
- Retail Analytics and Enablment: Solutions that enable brands and retailers to regain competitiveness and relevancy in an increasingly connected, networked, and digital world
- Internet Infrastructure: Network and enabling technologies that integrate with existing infrastructure to provide new or differentiated services to end-customers around the world