INVESTMENT CRITERIA
Vyvant Ventures invest between $100,000 and $1,000,000 in early stage companies. We are looking for companies that have an established proof of concept and are poised for growth. We have invested across multiple industries but have a core strength in business products & services, media, internet/web services, mobile, and financial services. We tend to avoid investments that require significant capital and regulatory approval in order to get their product to market, such as life sciences.
While the merits of each investment will vary, we evaluate your venture according to the following criteria:
Management
team. We look for teams of high-quality entrepreneurs
with a track record of leadership and performance - either in
the company's specific industry or in prior entrepreneurial
ventures. We also look at your team's passion for and commitment
to the new business idea, and your ability to inspire confidence
among future stakeholders, including employees, potential
customers, and investors. As we will be working together as
partners, your team's credibility is essential. In addition,
your team must be open to and comfortable with receiving input
provided by angel investors.
Market opportunity. We invest
in solutions that address major problems for significantly large
addressable target markets (i.e. a $500+ million market). Your
company must demonstrate a strategy to claim a reasonable share
of this market.
Financials. We are looking for well thought out
and reasonable revenue plans. Most financial plans do not
achieve their revenue projections, so we will evaluate plans
under the assumption of a revenue shortfall. Consequently,
gross margin and cash positions are critical variable to manage.
Valuation. We invest in pre-money valuations
that are below $5 million. The majority of our deal valuations
are in the $2.0 million to $3.5 million range. A key reason for
this is that it gives the investor the potential for a nice
return at a modest exit valuation. It also allows for some
protection against future round dilution. It is also in the
entrepreneur's best interest to have the valuations of
subsequent rounds increasing and avoiding bad will and
anti-dilution ratchets.
Use of proceeds. Funds must be used to
accelerate your company's achievement of key milestones that
increase the company's value. We often fund activities that
include research and product development, building a sales and
marketing infrastructure and hiring key executives.
Growth potential. We look for companies that
can grow quickly and manage the scale necessary to succeed. Your
company must demonstrate a plan to generate significant profits
beyond the initial product idea. Do you have a strategy to
achieve multiple sources of revenue?
Competitive advantage. Your company should have
some proprietary features that distinguish you from potential
competitors or provide barriers to entry that prevent other
companies from capturing your customers with a similar offering.
Attributes that convey competitive advantage include
intellectual property protection, exclusive licenses, exclusive
marketing and distribution relationships, strong brands, scarce
human resources (i.e. knowledge and skills), and access to
scarce raw materials.
Fit. Our group members are all accredited
individual investors with significant executive experience in a
variety of fields. One of the benefits of working with angel
investors is the active coaching and contact network that such
investors can provide. As such, there must be a fit between
members of our group and your idea, and your team.
Technology. We prefer to invest in
first-of-a-kind new ideas, rather than incremental enhancements
to common products and services. Is this a nice-to-have, or a
need-to-have product or service? However, we approach highly
complex, esoteric technologies with caution. The concept behind
the technology must be proven and verifiable. Further, we avoid
science projects that don't demonstrate a clear path to
commercialization. Any breakthrough innovation must be
accompanied by a strong business plan.
Exit strategy. Our members typically seek
returns of at least five times their initial investment, within
five years. This level of return on investment is essential due
to the high risk and likelihood of failure among early stage
ventures. Thus, a clearly articulated exit strategy - how angel
investors will extract such returns - is essential. For example,
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? Angel
investors are not just interested in the strategy you select,
but more importantly in the how - the operational strategy that
shows specific steps you will take to achieve the exit.