Investment process and post-decision communication
How do we make our investment decisions? What can we do to ensure that the entrepreneurs behind projects whose impact was obvious don't stop at a refusal on our part?
The most complicated thing for a VC, and perhaps even more so in impact, is having to say no.
Each month, we receive an average of 150 decks and select a single start-up for which we assemble a team of entrepreneurs and C-Levels who will contribute investment and skills.
We have to say no to dozens of projects whose potential impact was obvious. And it's heartbreaking.
How can we ensure that the entrepreneurs behind these projects don't stop at a refusal on our part?
What can be done to ensure that they can be referred and/or financed by others?
If we only decide to bet on one team per month in the end, how can we make our decision-making process as transparent as possible?
This article provides some answers.
Our investment funnel
Let's start with the selection process.
Every month we receive an average of 150 decks.
At the end of the weekly process, we discuss with 4-5 teams and launch 2 to 4 more in-depth due diligences per month. For a final investment per month.
How does the filter work?
Of the 150 decks received, around 1/3 did not meet one of the following two criteria and were not selected:
1) There is an "impact at scale" thesis
2) the vision is expressed clearly enough.
Each team member rates all decks from 1 to 5 (1 being the best).
The lower the average score, the longer we take to exchange views on the project.
At the end of the weekly process, 4-5 start-ups are selected for further development.
Partner/analyst pairs are formed to exchange ideas with founders.
In general, we launch between 2 and 4 more in-depth due diligences per month. The end result is an investment.
Why don't we go further?
- The impact is not sufficiently systemic
- The market is too small
- Lack of at-scale ambition
- This is the nth project on the same vertical, with no strong differentiator.
- The company is located outside Europe (for the time being)
How does a start-up get to the top of the list?
- A fresh look at the world
- A convincing impact thesis
- A capacity for storytelling
- A large addressable market
- Team/market fit
Are we still in agreement?
No.
In fact, all partners have the opportunity to defend a project on their own.
Is a no a definite no?
No, I don't.
Our community regularly sends us decks that we look at again.
One of which we finally decided to invest in.
So what should be done about the projects that were ultimately not selected?
1. We make a point of notifying all founders in a well-founded manner. We want this feedback to be as useful as possible.
2. For projects lacking in maturity, we make numerous connections between similar projects or between complementary founders and/or refer them to support and acceleration structures such as Alliance for Impact, makesense and 50 Partners Impact.
3. We refer all "coup de coeur" projects to partner funds such as makesense, Investir&+, Raise, Ring, Citizen Capital, 2050, Founders Future, Quadia, Evolem, FAMAE Impact, IMPACT Partners, MAIF Impact, Alter Equity, Elzeard, Satgana, @made for all, Leia Capital, or crowd equity players like LITA.co , Sowefund or Tudigo.
