Investment Criteria

Stage

Third Party Verification

Positive feedback from customers or industry experts.

Geography

NYS; Southern Ontario.

Prior Funding

$500k

Team

Strong entrepreneurial lead with domain experience.

Competition

  • Potential competitors have been identified, but your product or service has a competitive advantage that (a) distinguishes it from potential competitors and (b) creates barriers/challenges for competitors.
  • Hard for a competitor to replicate.
  • A ‘secret sauce’ that will prevent a competitor from taking you out, such as:
    1. Product differentiation: You’ve got something completely different (and hard to replicate).
    2. Process differentiation: You are selling a new, more efficient way of doing things.
    3. Price point differentiation: You have found a way to sell a product or service for less or for more (i.e. premium pricing).
    4. Super niche differentiation: You’ve found a market that’s a particularly good fit for you.
    5. Intellectual property protection.
    6. Exclusive licenses.
    7. Exclusive marketing and distribution relationships.
    8. Scarce human resources (i.e. knowledge and skills).
    9. Access to scarce raw materials.
    10. “First mover.”

Market

  • Minimum Addressable Market of $100m
  • Venture satisfies an existing market need or stimulates a new need in an existing market?
  • Do requirements for achieving success in the market change slowly or rapidly?
  • Distribution channels already exist.
  • Big market.
    1. Generally $1 billion (globally).
    2. “Addressable market” at least $500 million.
  • A demonstrable and significant demand for your solution.
  • The projected spending in your product category is large and growing.
  • Growth potential:
    1. We look for companies that can grow quickly and manage the scale necessary to succeed.
  • A plan to generate significant profits beyond the initial product idea. [a strategy to achieve multiple sources of revenue].
  • Buyer concentration.
  • Geographic location.
  • Regulatory barriers to entering.
    1. Strategies to address.
    2. Time and expense?

Use of Funds

  • A well thought out plan that explains how the money raised will be used.
  • Funds will be enough to help company achieve key milestones that increase the company’s value.
    1. Technical milestones that this financing will help achieve are clear.
    2. Future financings with accompanying milestones are clear.
    3. Understanding of company’s burn rate at each of these milestones.
      1. A contingency plan exists if things don’t go well.

Exit

  • A plausible exit strategy within 3-5 years. (Is there an attractive outcome for founders, employees, and investors?)
  • Return on investment of 10-20 times the initial investment.
    1. Depends on the riskiness of the plan.
    2. This level of return on investment is essential due to the high risk and likelihood of failure among early-stage ventures.
  • Do you plan to sell the company to an established corporation in your industry? Or will your exit be through subsequent rounds of financing—venture capital or the public markets?
    1. Potential for partnerships.