How we invest (AKA transparency to save your time)
Raising venture capital can be stressful and we know from honest conversations with founders it can also be intimidating. We don’t want it to be. In the interests of transparency, here are the most common questions we get asked.
How many companies have you invested in so far?
Fund one launched in 2013 and backed 10 companies. Fund two launched in 2016 and has made more than 10 investments so far. You can find most of them here.
How long does your investment process take?
Your time is one of your most precious resources, so we try to waste as little of it as possible. We’ve are constantly getting faster at progressing startups through the investment process. It usually takes us about a month to go from an initial meeting to an agreement, and we let people know as quickly as possible if they’re not a fit for us.
What size rounds do you do/what size cheques do you write?
Our average first investment is around $1 million, but we have invested from $150,000 up to $3 million. The rounds are usually larger than that - we prefer to co-invest alongside other investors. We’ve invested in rounds from $500,000 up to $10 million US.
Co-investing is partly about de-risking the investment, but more importantly, it’s about surrounding the founder with good people. We’ve invested alongside several Australian and US funds including Blackbird Ventures, Airtree, Square Peg, Tempus Partner, Draper (US), Lightspeed Ventures (US), Aspect Ventures (US) and many more.
Are there areas you are particularly looking to invest in?
We are open to almost every kind of technology company but we’ve detailed our particular areas of interest at the moment in this post.
Do you have any dealbreakers?
We are deliberately broad in our focus and don’t have many hard rules. The only hard rules are no companies that profit from gambling and smoking.
We also don’t take the majority stake of a startup’s equity - we don’t do investments that push founders into a difficult position. Never will - we launched this fund to empower and support founders.
Do you invest at the idea stage?
We need a little bit of revenue to write the cheque but we have connected with founders and been convinced they were worth investing in before they brought even a dollar in. Reaching out early is a great way to ensure both sides have ample opportunity to get to know each other well.
Do you lead rounds?
We’ve led rounds before and will again, but we don’t insist on it. We’ve followed another fund’s terms a couple of times but we don’t insist on that either. Because we prefer to co-invest, there often isn’t a clear lead among the investors - we’ll collaboratively work out terms together.
You talk about diversity quite a bit - how do your investments stack up in relation to founder diversity?
As of October 2018, 39% of the startups we’ve invested in have founders who are women, and 38% have founders from non-British/Western European backgrounds.
How does the Rampersand VC investment process work?
There are four steps in our investment process, with a clear continue or not communication at each step.
After you get in touch or we reach out to you, we’ll make a decision about if it’s worth exploring further. We try to get back every inquiry within a few days at most.
If it is, we’ll organise a phone call with someone on our investment team, usually either our investment manager Nicole or our head of growth Rose. The goal of this conversation is to get a sense of where the business is up to, as well as what your plans and potential are.
The next step is meeting with one of the partners.This is when we start to get a deeper understanding of the problem you are grappling with, and your vision and strategic plan for the business.
If you progress to the next stage - meeting with the managing partner you are yet to meet, we’re seriously interested. There may be some additional questions via email as we’ll be starting our due diligence deep dive now.
At this point, we feel we know enough to give a clear yes. From here, due diligence and terms are worked out. Provided no unassailable problems emerge in the DD process, it’s welcome to the portfolio family time.
When I hop on a call or meet with a member of your team, what are you looking for?
Great question. In the first call, we want to understand your world: what’s the problem, what are you building and why. The checklist for us at this stage is:
Your team solving a genuine issue for a lot of people in a way that makes sense.
You’re switched on, with either direct experience or deep insight into the problem space (ideally both).
Your company is not competing - now or in the foreseeable future - with any of our current investments.
Your company and investment needs are within our scope (such as stage, the amount you are raising).
The first partner meeting is looking to develop our understanding of all of the above as well as:
What’s the plan for this company? Where is it heading?
How do the founders think? How do they solve problems? Do they have the ability to navigate the years required to build this company into their vision?
What’s the go-to market model? Does it make sense? Does the team have the ability to execute upon it?
Can this business grow to the size we need it to?
From here, what we need to better understand varies significantly as companies progress through the process. Some founders walk in with a really clear strategic commercial plan, and others with a great product roadmap. Some we’ve known and followed for years, some we’ve never met before. Because of this, we try to proactively manage expectations before each meeting, but if you feel unclear on exactly what we’re looking to understand better, just ask.
The whole process is generally under a month, but it can vary. What makes it longer? Generally it’s the lawyers, but it can be wanting to spend a bit more time building the relationship or understanding particular points. Our emphasis is on collaboration throughout the process, both with the founders but also with co-investors . This is going to be a team effort, so there’s value in getting the team together as soon as is feasible.
We don’t need extensive ten year plans or investment proposals that take 20 pages to understand what the business even is. As with most VCs, we don’t need or want to hear about exits plans - it’s too early to tell and there is a huge amount of work ahead of you before this kind of thinking is valuable.
Do you only invest in Australian companies?
Our focus is on Australian companies but as an ESVCLP, we can allocate up to 20% of our fund in foreign companies. One of our startups is a New Zealand company, so we are able to make another handful of foreign investments.
I only want to tell you about my startup after I sign an NDA. Is that ok?
Like pretty much every other VC, we don’t sign NDAs. This is an industry where trust matters, and we would go out business very fast if we didn’t respect the companies pitching to us. On the rare occasion a startup has had to sign an NDA to win a client or customer, we’re open to discussing how to find a solution that works for everyone
How do you structure your investments? Equity or convertible note or something else?
Our preference is straight equity, we have a leaning against convertible notes (see this great piece from Mark Suster) but if you really want them, we prefer SAFE notes.
What ongoing support do you provide beyond the capital?
The basis of rampersand was to help give the companies we back an unfair chance of success through our experience and networks, so we are at our founders’ disposal. Our role is to become a trusted adviser for our founders — for both the good bits and the hard bits. We know there are going to be difficult parts of every company’s journey, and we don’t expect the founders we back to have all the answers. It can be very lonely being a founder, and we are there to back you no matter what happens.
This manifests in a number of ways, from board or advisory roles, regular catch ups, support with PR, marketing, sales, M&A (all skills found within our partnership and support platform), and of course cheerleading from the side.
We love to hear directly from founders. Get in touch with our team.
We’re unapologetically broad in our focus. Find out what we’re most excited about.
Time is your most precious resource as a founder. Here’s our investment process.