We invest our own money in every deal we present to our members. We are principals – never brokers. This fundamental construct makes sure that our interests are aligned with your interests – making profitable investments.
Every year, we look at hundreds of deals. Almost all of these deals are referred to us by someone in our network or accessed through our own research and outreach – it is very rare that we accept cold calls from what may be struggling or even desperate companies.
From this deal flow, we choose only those deals for which the likelihood and potential magnitude of success create superior investment dynamics – simply put, we look for situations where our judgment says the probability of dramatic success far outweighs the risk of losing money.
We primarily look for technology and technology-enabled companies with the following characteristics:
- Large market opportunities
- Skilled, candid leaders/teams who know the problems of their target customers
- Business traction defined as meaningful, growing customer validation
- Growth strategies and business models that make sense
- Attractive and apparent market for exit events and outsized returns
Our investment choices are never snap decisions. We have the experience and do the work necessary to ensure that our deals meet our investing standards. We look to get to know entrepreneurs and their businesses over time so that we can see how well they meet their objectives and deal with challenges – they also get to know us better and find out that we are often able to help them develop, regardless of whether we choose to invest at that time.
We compel ourselves to be brutally honest and clear about the risks. None of our deals are “sure things,” but we strive to be as sure as possible about the reasons that we might lose money and to determine whether the risks are tolerable relative to the likely gains from success.
We know what makes for reasonable valuations, terms, and conditions in our investment agreements – we insist on them in our negotiations and ensure them before we execute and close.
Once we invest, we closely monitor every deal for the duration of our investment. We require candid assessments of progress and challenges from company executives. And we bring the power of our network to bear to help our companies with strategy, execution, and connections.
Studies have shown that investor returns tend to expand with the extent of the due diligence. We embrace this. We put ourselves to the test every time not only by insisting that Randy and Scott must unanimously agree that a deal is worthy and back it up with their own money, but also by demanding that we clearly and fairly write up every deal to demonstrate our rationale for our members – who can see for themselves the quality of work that results from our disciplined, repeatable process.