Financial Scope of Club Investments
- The scope of Club investments runs between $0.5M and $3M.
- For each investment, a minimum investment goal of $0.5M – $1M is set in accordance with the level of risk for that investment.
- The minimum individual investment generally runs between $20K and $30K. The higher the risk level, the lower the minimum individual investment.
Criteria for Initial Screening of Candidate Start-up Companies for Investment
The following are basic guidelines for use in the initial screening of companies that may be suitable for Club members to invest in. These are not prerequisites – they serve as guidelines only. A company that meets most of these guidelines is given the possibility of raising investments through the Club.
List of criteria
- The company’s leading team is experienced and reliable with a good track record and good likelihood of leading the company to success.
- The company has already undergone at least one round of financing of at least $1M.
- The company has annual revenues of around $1M or has signed agreements with sales potential of a similar amount.
- The company entrepreneurs and shareholders are also participating in the current round of investment.
- The company has a clear 3-year business plan including a mechanism for returning investments (exit, dividend, etc.)
- Co-investment of institutional entities, funds, or private investors recognized in the company’s business sector.
- The company has achieved approval and support from the Chief Scientist.
Main Criteria for Examining an Investment
- Profile of the company’s management team.
- Prevailing market conditions for the product or service being sold – market size, competition, competitive advantage etc.
- Capital raising – previous rounds of investment, participants in the current round, company’s value etc.
- Purpose of the current round of investment.
- Financial figures – in-hand cash balances, burn rate, expected date for transition to a balanced cash flow, cash needs until transition to balance, working capital needed etc.
Means for Investment Risk Reduction
- A high quality screening system.
- Deposit part of the funds in escrow until a significant milestone is reached in the deal (in some of the investments).
- Participation of entrepreneurs and shareholders in the current round.
- Participation of recognized institutions or known private investors in the current round.
- The investment is by means of a convertible loan.