Being first-cheque investors, we understand the importance of being flexible, founder-first partners at the earliest of stages. We invest up to £750k initially and can shape or join your rounds of up to £2m, also reserving a portion of our fund to support you to Series A and beyond.
- ~£400k: Average initial cheques of £400k, invested only at the pre-seed stage (up to £750k).
- Up to 15%: Target ownership upon entry - we can lead, co-lead or follow in rounds of up to £2m.
- 4 step: Transparent and open investment process, ensuring you always know where you are in our process.
OUR PROCESS
You should always know exactly where you are in our process. The diagram below outlines the steps and process to reaching Investment Committee (IC) stage.
- Introduction: An initial meeting to discuss the opportunity and get to know you. We ask founders to send us material such as pitch decks beforehand
- Deeper Dive: Our Junior investment team tends to join this second phase to give visibility to members who may work on the investments.
- Partner Call: At this stage we bring in a Partner with relevant experience and will dive deeper into the business, team and market.
- Investment Committee: A 15 min presentation followed by 30mins Q&A in front of the full investment team. We make a decision same day.
Our “criteria” for investing
What do we look for when selecting an investment? Investments we want to make go beyond a checklist of “box ticking” on our non-negotiable requirements (e.g., that we trust the founders).
We do as much as possible to mitigate our own biases when investing. For us, a startup / founding team needs the potential to be more than merely great, it needs a shot at the extraordinary. The good news is that to do that, we only look for at least one reason to believe, at earliest of stages, that it can be an outlier...
Our reasons to believe a startup could be one of the greatest companies ever
Need at least one of the below compared to other great startups at the same stage
Founder(s) and team
- Ever do something singular? Record of unusual achievement
- Best-in-the-world domain experience or punch-way-above-your-weight-class first hires
- Depth of commitment to the problem ("would do this for a decade, and keep going even if funding never appeared"), especially in learning the domain
- Would you work for the team?
Product and market
- A wow of a product experience and/or extreme early growth and engagement numbers (for products adopted by individuals)
- Customers don't need to be sold, want to pay full-price immediately -> evangelists (for products adopted by companies)
- Exclusive path to customers -- distribution as a competitive advantage
- Timing -- that One Moment is clearly now
Business and economics
- Surprisingly profitable unit economics
Deal terms
- None. (Good deal terms are never a reason to invest in and of themselves.)
Important indicators
Can bias us for or against investing
Founder(s) and team
- Combination of human / inhuman, presence of cognitive distortions of founders
- Spends only when necessary, miserly with capital until the returns are clear
- Reaction to intense pressure or strong criticism?
- Differentiated value proposition for talent (e.g., only place to work on a problem, unique founder who is a reason to join the team)
- Diverse founding team
- If business shows early signs of success, can founders go the distance?
- Talking with founders gives us goosebumps
Product and market
- Someone else already tried -- good sign!
- Clear initial target market, surprisingly narrow
- Clear single metric to focus on now (often engagement or satisfaction)
- Ignoring the business fashions of the moment
- Ability to create a #1 service in its market (e.g., network effects, customer lock-in)
- Could be most important product to its users
- We have a unique ability to help
- Clear sense, if applicable, of any direct competitors and why the company has superior offering for its market
Business and economics
- Clear sense of why to raise capital (i.e., where to deploy)
- Clear sense of why to raise venture capital (we often discourage founders from taking venture at all)
Deal terms
- Founders own enough of the company
- Fair ratio between risk and reward?
- Pro rata rights
- Information rights, especially to financials
- Other investors can help the company succeed
- In success, our eagerness to invest many multiples of our original investment
Non-negotiable requirements
Need all of the below
Founder(s) and team
- Trustworthy (e.g., will tell us when things are even a little broken)
- Can raise more money or get business to profitability
- Capable of building a diverse team and an inclusive culture
- Background check conducted, any issues discussed
- Have a UK presence or material Impact in the UK
Product and market
- "Makes business work better," without being in financial services
- We have judgment to identify a winner in the relevant market (i.e., a fit with one of our stated investment areas) -- and enough confidence in our judgment that, when things go sideways (as they inevitably do in startups) we'll remain devoted investors
- Unlikely to compete directly with our other portfolio companies (and verified, if in doubt, by the founder(s) in question)
Business and economics
- Plausible to have sustainable unit economics in the future
Deal terms
- Standard investor protections (i.e., liquidity preference at 1x - blocking right over investments that would get repaid before we do)
- Risk-return work for our fund size (Our check size between £200k - £600k typically equates to anything between 8-12%)