From start to finish, our investment process is pretty standard but here’s a quick overview of what to expect:
It’s always best to reach out to us through a mutual connection who will provide an introduction and hopefully a strong recommendation. Also feel free to introduce yourself at a conference or one of the many events we attend – here is our conference “mobbing” etiquette.
Send us Details
Send us an investor deck (10-15 slides) summarizing the opportunity (in no particular order): product vision, inspiration for the idea, market potential, team, ecosystem/competition, fundraising specifics, etc. If you have an alpha or a prototype, send us access so we can test it ourselves or point us to video featuring your product.
We will take a first pass on your material to establish if the opportunity meets our core criteria: sectors, geography, stage, size of the investment. And we quickly assess with you if there is any risk of competition or overlap with the rest of our rather large portfolio – unfortunately an instant pass for us. Given our active involvement with our companies – especially at the early stage, we avoid any overlap or risk of conflict at the time of the investment. If not a fit, we will try and let you know ASAP.
Meet the Team
If we are interested in learning more, we invite you to visit us in San Francisco. We strongly prefer first meetings in person, but we’ll make exception for non-local teams. Typically, you will have an initial meeting with one member from our team.
Successful investor meetings will lead to additional conversations with the remainder of our team (you’ll meet everyone!), contacts with (non-competitive) experts in our network, reference checks, etc. One of the goals of our diligence cycle is spending time together to make sure that we have “compatible personalities” – most of our companies will spend 5 to 7 years in the portfolio, so a great personal relationship is paramount.
We encourage you to go though the same level of due diligence on us. We are happy to make any of our existing or former CEOs available to you as potential references.
If everything checks out (for both sides), we’ll talk terms – either based on what has been discussed with the lead of your round, or something that we’ll discuss if you want us to take a lead position. In the latter case, we’ll make an offer via a termsheet – including simple, clean terms.
If the discussion (and sometimes a bit of negotiation) is satisfactory to both sides, we’ll commit to your round and will invest once the legal documents have been drafted by your counsel and reviewed by the law firm representing the investors.
This overall process typically takes two to three weeks to wrap up, but we have occasionally made investment decisions faster when the situation required it. We try to answer most of the opportunities we receive (except mass, untargeted emails) but sometimes we get so many per week that we just aren’t able to do so.
Notes vs. Equity
We are often asked if we “do” convertible notes. We vastly prefer equity rounds, especially when the raise is $750K and up. But we’ll agree to convertible notes provided that they include a cap on the conversion – basically agreeing on the valuation of the company at the time of the investment and setting that price as the maximum price we’ll pay for our equity when our debt converts.
Oh, one more thing. We never sign NDAs to have an initial meeting with a company. Ever. If this ever takes place (and it never does), it would be much further into the due diligence process.