Investment Process

We will respond to ‘leads’ from any sources – angel network groups, university technology-transfer offices, third-party support companies or through a direct approach by the companies seeking investment.

Our first step will normally be to read the Business Plan or Executive Summary of the company. In common with most VCs, we prefer not to sign NDA agreements at this stage. Naturally, we do take seriously the need to protect any information passed to us by potential investees. We will sign an NDA if necessary, at the right stage, but strongly prefer not to do this in order to do the first-pass examination of an investment proposition.

Our remit, although simple, is a fairly tight one. We will not proceed with an opportunity where there is not believable growth to a $100m+ company, or where there is a lack of strongly defensible IP or where the valuation or amount sought is too high.

If the Business Plan indicates that a proposition might fit our investment remit, then a meeting with the key personnel is usually arranged. This may be in Oxford or on company premises depending on the situation. It is always true that the management of a company are an absolutely vital part of our assessment. We rely on there being a full and competent management team at the time of the investment. This implies that the management is already in place that can take the company forward through at least the next major stage of growth. If there are gaps in the team, there must be a clearly defined and inherently executable plan to bring a full management team together. We typically join the Board as a Director or act as an Observer and use our experience, expertise and networks to advise and guide management as much as we are able given the demands upon our time.

For a company that has passed these stages, we would next seek to agree a deal. We generally prefer equity-only investments and will seek agreement for a particular investment amount which gives us an agreed, fully-diluted percentage holding. If we are leading the investment round, it is only at the point at which we have verbal agreement on a deal that we may issue a term sheet and start to spend money on the investment process. The term sheet, if agreed and signed, will normally specify a one-month ‘closed period’ in which the investee company agrees to negotiate only with Seven Spires. Financial, legal and technical due diligence will be initiated at this point. There will be an indicated day on which we will expect to sign an investment agreement. Additional technical due diligence may be sought from a recognised, independent expert in the appropriate field. If another investor is leading the investment we will endeavour to work cooperatively with the lead and other syndicate investors.

Investment in technology