We invest in high-growth businesses. In particular we find SaaS business models attractive, although we have a wide investment mandate and seek a diversified portfolio.
In general we look for:
We look for companies where there is clear evidence that they understand the end user, and that have created products and services that delight them. We look for an understanding of the other players in the market place, and of what global niche the company is targeting.
Companies that we have invested in have targeted end users including hairdressers and spas, retail ISPs, Chinese mothers, gyms, HMOs, HR departments at fast growing companies, boarding schools, 18-35 year old NZ women, developers at fast growing companies, HR professionals, large enterprises, ICT providers and so on.
We look for companies with a clear understanding of how they find and retain paying customers, and we especially look for a growing revenue curve. We don’t mind small revenues, but we do not invest in companies without revenue from their product or services. (We’ve made one or two exceptions – but they had revenue pre-booked.)
Companies that we have invested in have acquired customers through person to person selling, referrals, old fashioned networking, new fangled networking, advertising and being great at in-bound and on-boarding. The dominant sales process evolves over time, and we expect to see worn shoe leather at the start of the journey.
We look for founders who really know their space, who can attract and retain a great team and who are capable of leading the journey for many years. We expect to see technical talent inside the tent, and founders to be working in the business full time. We like teams who are guided by a smart and experienced board, and are comfortable with Lance or Chris being on the board or not.
We’ve invested in companies with one founder, two founders and several founders. Seven of the twenty companies have female founders, co-founders and/or CEOs and about half have couples in the business. We have good cultural diversity as well. The founders range in career progression from recent graduates to well seasoned professionals, from miners to COOs to successful previous founders and more. They are all are inspiring, focused on building great businesses for the right reasons and tenacious.
Lance is on the board for 11 of the 20 current investments.
We look for reasonable valuations that make our decisions easy. We prioritise companies we have invested in already, when performance merits it. We do not charge any fees or demand any kickbacks, and strongly prefer not to invest in companies with these sorts of shareholders. We look for companies with simple shareholder registers and we seek to minimise your legal costs by keeping the deal simple. We strongly recommend that you retain a lawyer who understands founder-centric early stage investment. Ask us for a recommendation.
Our current investments range from just under 2% to 40.4% of company ownership, and we aim to hold 10-18% after the first investment. Our average holding value of our investments is currently just under $2 million per company, and we have invested amounts between $40,000 and $6.4 million.
We prefer to lead investment rounds, but don’t always.
We obtain funds periodically and usually invest very quickly when we do. Then we have no funds until we raise again. So in essence we run a batch investment process.
We prefer conversations, whiteboards, Dropbox and Xero over Investment Memos and pitches, though it’s best to be introduced (by a non-paid intermediary please) or give a detailed email to get that far.
Lance tries to respond to emails quickly, but sometimes they get buried. Try, try again.
Paid intermediaries do not have privileged access to us and we are unlikely to approve fees.