Because we invest in the earliest cycles of business formation, we take a portfolio building approach to early stage investing so as a result we make more bets than most VC’s our size. We simply believe that having a broad portfolio creates a natural hedge against the unpredictable and binary nature of early stage investing. A broad portfolio also gives us the latitude of being just a little correct and a bit lucky to hit outsize returns. But if on the other hand we’re completely wrong, this approach won’t significantly impact our downside. It’s not quite “spray and pray” as the armchair investors like to say but more a “sprinkle and reflect” approach. For us it’s analogous to “buying a front row seat to the future” with a modest initial bitesize then observe and learn from a unique vantage point. However, we are always eager to exponentially increase our position once we’ve seen actual data of market validation and commercial traction.
In our US practice, we mostly take a co-investment approach to help emerging companies bridge the “post angel and pre-venture” gap, which was the most challenging phase we experienced as founders. We usually start with an average initial bitesize of $250-350K and can follow-on until $1.5 to $2M if the thesis is proving itself out.
We also don’t mind leading rounds when we feel that we are in the best position to do so and like to bring in co-investors who can add value. We are also just as comfortable to take a backseat, join a syndicate and help out whenever we are asked. The combination of portfolio building and co-investments have enabled us to invest in over 300 companies and co-invest with over 200 early stage investors since we started in 2003. These form a powerful network which supports pattern recognition, diligence, co-investment and business development.