Value Chain 1
Sourcing is very important for start up investment. There are so many start up companies these days. However 95% of start up are ceased to operate within 2years. Indeed, an investment for seed or series A round companies are very risky in general. Our mission is how we can minimize such risk and become sophisticated as and investor. Most of start up can’t reach break even at seed or series A stage.
Given the fact, we evaluate these 3 key factors of founders as we believe they will minimize the risk.
Flexibility (Ability to change)
We really want to avoid the case where founders give up its business. Thus, we put more focus on passion of founders rather than short-term financial result at seed or series A stage.
Value Chain 2
Once we select some potential candidates, we then shift our focus to equity/CB valuation.
Most of start up offers CB to investors. As set-forth in an agreement, CB will be converted to non-voting shares in the future when a triggering event occurs. It is very important to understand in advance how much potential share and allocation we can take in each company. If the company moves to next stage (e.g., seed to series A), the valuation of the company and holding share of investors could be dramatically up. Overall, investors should consider valuation and share holding at the time of investment.
Furthermore, we carefully read through documentation. Generally, most of start up companies in the US use SAFE which is a popular form of an agreement. We have experience to read through SAFE in detail.
Value Chain 3
Investing money in a company is not a goal. Rather, it is a start of relationship with the investees. We can help communication and follow up for monitoring.
On the other hand, in the investee’s hat, after initial investment, we support investees in term of additional funding needs, introduction of potential investors, business match-up for creation of synergy and so on. We are on the same boat. Our goal is completely same as founder’s. We do at least quarterly update meeting and then make a strategy to a future exit. At the same time, we invite some potential investors in an ongoing round.