How we invest (AKA transparency to save your time)
A no bullshit, hopefully helpful version of what we look for
For startups, the fundraising process is tough and time-consuming. Unfortunately for your early stage business, at the exact time when you want your numbers going “up and to the right” the people most responsible for driving that growth (i.e. you and your co-founders) are taken out of your business to trudge around seemingly endless meetings with potential investors, the vast majority of whom won’t invest (statistically speaking).
At rampersand we often discuss how to hack that process to save founders’ time and increase the chance of finding a fit which, given we back ideas and(most critically) people, is not always super easy. One we way we do it is keep a register of founders on our watch list who we check in with regularly and map progress, so when it does come time to raise a round, much of the work has already been done.
Another way is to be totally transparent about our systems so we remove lots of the guesswork and get straight into meaningful conversations. So, here’s a no bullshit, hopefully helpful version of who we are and what we look for.
what we look for
- Unique solutions to genuine problems
- Big markets or niches you can own: preference for globally focused companies but don’t have any strict rules
- Tech: fintech, mobile, saas, data/AI, robotics etc etc (i.e. things we understand and can help with). Only boundaries are medical, green and bio, where we’re not experienced, and gambling (which is just a personal choice)
- Post-seed (i.e. already launched): Companies should have some traction, usually revenue. What’s enough traction? This is the hardest one to define — the progress we focus on is knowledge rather than revenue (i.e. understanding of the customer, acquisition processes, retention). Generally we invest in companies with <$1m revenue.
An upfront note on gender: diversity is about more than gender, but we simply do not see enough female founders (in fact, only 14% of the founders we see are women). We have a number of initiatives in the pipe, beyond the fact that Jim is a long time champion of women in tech via his Directorship of VIC ICT for Women amongst other things, so watch this space, but this is a special plea to female founders — please come forward.
the dream pitch
Here’s what we want to understand:
- You and your team
- The problem you are solving and why
- Your unique solution
- Progress to date
- Big plans
what we don’t care about
- Your exit strategy: it’s way too early to tell, and we’re not backing you for your exit strategy
- 10 year financial plans: just tell us what your milestones are and how you build up to them
- IM’s that take 30+ slides to explain the proposition
We have a four step process, with a go/no go after each stage:
- First meeting: usually with Jim, Eloise or myself
- Meet with the other managing partner
- Initial due diligence followed by internal presentation to investment committee (term sheet would be presented at this point)
- Finalise the investment
The whole process is generally 4–6 weeks, but can be vary. Our emphasis is on collaboration throughout, including with co-investors — this is going to be a team effort, so there’s value in getting the team together sooner than later.
terms and structure
We are happy to lead an investment round or follow if you already have a lead but we do prefer to co-invest. 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.
once the deal is done
We feel our job is relatively simple — find the best entrepreneurs in the country, ensure they have enough capital to thrive, and help them surround themselves with the best people. 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. We believe that our role is to become a trusted adviser for our founders. 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 shared services model), and just stepping back and cheerleading from the side.