questions & answers
Raising venture capital is a two-way street. Smart companies do the same amount of due diligence on their potential investors as investors do on portfolio companies. You should ask tough questions of your potential investors and expect the same in return. Some of the same questions come up again and again so we have included a few of them below to help people understand how we work. The questions are both general - about the venture process itself and the basics of raising money, as well as specific - about how Endeavour Vision operates as a firm.
How should I choose a venture capital company?
Choosing a venture firm is a very important decision in the life of a young company. This is not only driven by hard facts, but also needs to integrate aspects such as investment experience, industry knowledge, values and chemistry between people.
Before contacting a VC, you should have an idea about what their focus is. A VC could operate and invest only in one region or be investing across countries; may prefer early stage to later stage opportunities and finally, may invest in specific industry segments or have a broader approach.
The reputation of a VC is relatively easy to assess. Contacting some of their portfolio companies to evaluate their contribution is often the way to go. We have well established experience, reputation and track record. If you do not know us that well, it is highly probable you know of some of our portfolio companies. Endeavour Vision is a new brand that was created by combining investment teams from three established firms: Genevest, one of the oldest VC name in Europe that started in 1983, Vision Capital, established in 1997 as a pioneer in Trans-Atlantic investing and Endeavour, a VC formed by entrepreneurs for entrepreneurs.
Entrepreneurs should look at a firm that can help them expand from local to global markets and which can provide contacts, credibility and confidence towards the different stages of a company’s life, through good and challenging times.
In which countries do you invest?
We have two areas of focus: technology and life sciences and invest predominately in Europe and the US.
What is the best way to reach you? Do I need an introduction?
We welcome business plan submissions, preferably by email to firstname.lastname@example.org
. It can be very helpful to be referred by an industry contact or friend of the firm. We advise you to do some homework before you contact us, such as ensuring that your project fits our investment focus and check our portfolio to explore the different fields in which we have invested.
How do I submit my business plan to Endeavour Vision for consideration?
To determine if there is a potential fit between your needs as an entrepreneur and our investment criteria, the best approach is to send us a 3 page summary describing your business and your background as an entrepreneur, with some brief details on the actual stage of your company, investment needs, and future growth plans. This will help us determine if further discussions concerning an investment from Endeavour Vision would be mutually beneficial. If so, we will request a more detailed business plan for evaluation.
How can I be sure you will keep my idea confidential?
Due to the volume of submissions we receive on a weekly basis, we do follow the best venture capital practice of not signing NDAs (non-disclosure agreements) with some exceptions. However, we believe that successful investment partnerships are based upon trust between the entrepreneur and the venture capitalist. As such, we fiercely protect our reputation for professionalism and integrity. We will always respect the confidentiality of our discussions with you. See also our Terms and Conditions
What information do you find most helpful in evaluating my business idea?
A complete business plan is always very helpful, but a concise executive summary can usually give us the information we need for a preliminary evaluation. The following is a suggested checklist of information to include:
• Business idea and revenue model
• Market information and segmentation
• Product and technology description
• Company position in the market and key success factor
• Unique and sustainable competitive advantages
• Competitors and comparison to company
• Achievements so far
• Management team, employees, board members and investors
• Financial plan
What factors will influence your decision?
While we recognise that there is no single determinant of success, our investment assessment typically focuses on four core areas - the size of the market, the capabilities of the management team, the differentiation of the company's products and ideas, and the financial potential of the investment. We are also influenced by the interactions we have had with the entrepreneurs during the decision making process and in particular, the consistency of the feedback to our questions.
What does the due diligence process consist of and how long before a decision is made about investing in my business?
To say that "time is valuable" in our business is an understatement. We realise that you are under extreme time pressure to raise the investment capital you need to grow your business and seize the window of opportunity that is available to you. With that in mind, we conduct our due diligence as quickly and as thoroughly as possible. Due diligence is always a trade-off between expediency and thoroughness - so while we endeavour to be as quick as possible, we must also satisfy ourselves that the investment makes sense and that the risks associated with the investment -- market, financial, technical, managerial and execution are manageable and well understood from our side.
Each business and each investment decision is unique, so it is hard to give an exact time frame for completing this process. Typically, however, proper due diligence can take between six weeks to three months. Sometimes, we know a company and its management team for years before investing; in others, less than a month. Every evaluation is different. We think it is important to say, though, that if we make a decision to invest, we have done so unanimously, and the full force and effect of the Partnership's resources are at your disposal. We invest money but deliver value.
How is the Due Diligence process carried out?
We typically have four phases in our evaluation process:
1. Initial Screening
Review of Business Plan, call conference, initial meeting with management
2. Business Evaluation
Bottom-up analysis of plan, market analysis, examination of current/future customers, product tests, technology assessment, verification of differentiating factors, review of key issues. Interview with the whole team with early investors if any, customer/strategic partners interviews, etc. Evaluation of risk/return profile of investment and issuing of Letter-of-Intent (LOI).
3. Due Diligence
In-depth review of all aspects of company, references checks, review of IP, legal contracts and leads, meeting with company board, set-up of investment syndicate and potential board members, conclusion of terms.
The due diligence process itself consists of at least the following:
- Management assessment: Face-to-face meetings between your company management and our partners are absolutely critical. This allows us to understand and assess your team and to get a sense of that indefinable but critical quality of "chemistry". These meetings should also be your opportunity to assess us - whether you think that we can truly add value to your business, whether our thinking is aligned with yours, and whether you feel comfortable working closely with us on your future success. Typically, we will have five or more meetings with your management team - either as a group or on a one-to-one basis, to determine the above issues.
- Technical Due Diligence: This is either conducted directly by Endeavour Vision or, in some cases, with the assistance of outside experts, for example, to check the intellectual property or the country specific legal aspects. While technical sufficiency is always important in our investments, technical superiority does not, alone, justify an investment. In our experience, the world is full of technically superior solutions that never achieve market success because of management's inability to conceive, develop and execute a winning strategy. True success only results from a combination of excellent management, a large and/or fast-growing market, superior technology, perfect timing, dogged and unwavering perseverance. All can be understood and managed.
- Financial review: We spend a lot of our due diligence time to understand and agree on your business model and its underlying market assumptions. Financial projections are important, but only after understanding the assumed model, market conditions, pertinent predictions and management's ability to execute an intelligent and realistic strategy successfully.
Financial and legal audit, agreement on board rules and company reporting system, signing of contracts and payment.
How much will you typically invest in a company and do you require a certain ownership percentage?
Endeavour Vision seeks to invest up to EUR 10m in a portfolio company over the life of the investment and through subsequent rounds of investment. We typically invest follow-on rounds in our portfolio companies to continue the support and maintain our pro-rata percentage ownership. We usually hold a stake of 10% to 30% percent in a company to justify our involvement, and which allow us to contribute to the company's success.
Do you co-invest with other VC's and/or will you invest alone? Does Endeavour Vision lead investments or consider being part of a syndicate?
Endeavour Vision typically co-invests with other VC's depending on the particular needs of the company, the round size (amount of investment needed) and the stage of company growth. We believe that different VC's have different strengths and that, more often than not, a company should seek a syndicate of investors who can each bring something beyond money to the table. As an international VC seeking to help portfolio companies grow globally, our typical co-investors are VC's in the company's local market, who are adept at assisting the company in the day-to-day matters of building an effective organisation. We also co-invest with international VC's, who specialise in particular industry segments or markets, and who have a deeper technical understanding of a company's product or service. Our experience has shown that syndicates of two to four investors are optimal depending on company stage, and we are very keen to build syndicates together with entrepreneurs.
Our preferred role is to be the lead investor, possibly co-lead.
Do you require a Board Seat?
A seat on your board is preferred but not an absolute requirement. Our experience has shown that the board of directors of a company has a fundamental role in contributing to the success of the business. Therefore, we pay a particular attention to building strong boards, and we work closely with entrepreneurs to recruit independent board members, typically successful business leaders, serial entrepreneurs or industry veterans.
How do you value companies?
We approach valuation from several angles. First we look at several valuation techniques that are applicable for young companies, such as the “venture capital method”, cash flow valuation or earnings valuation. Then, we compare the deal with other comparable companies that we are evaluating or we know of and the typical market valuation. Finally, we assess qualitatively a certain number of basic operational elements of the company, such as the experience of the management, the development stage of the organisation, or the quality/number of customers.
How long is your investment period?
Endeavour Vision is investing in companies to grow them, with the objective to create a market leader in a new field. One of the limits we have is time which is dictated by the duration of Funds on which we advise; this is usually 10 years. However, for companies that are in hyper growth stage, this limit can be extended. This said, the average horizon to mature an investment is generally 5 years.
What type of exit strategy do you prefer?
Endeavour Vision believes in teams who are able to build strong and sustainable companies. We will, in the majority of our investments, prepare our portfolio companies to exit through a listing in one of the main markets. However, many of VC backed companies end-up being acquired. Being acquired by the right company is also fundamental to ensure long term prosperity. We have a vast experience of successful IPO’s and acquisitions.
What investors do you advise?
Prominent industrial corporations, family offices, global institutional investors and influential business leaders in the technology and investment industry are typical investors in funds we advise. We have a very close and interactive relationship with most of them and regularly receive from them industry insights, high level business contacts and business opportunities.