While the dynamics of each investment will vary, Irrus Investments typically evaluate early-stage investment opportunities according to the following broad criteria.
We look for teams with great entrepreneurial potential as shown by your prior business, academic or entrepreneurial ventures. We also look at your team’s passion for and commitment to the new business idea, and your ability to inspire confidence among future stakeholders, including employees, potential customers, and investors. As we will be working together as partners, your team’s credibility is essential. In addition, your team must be open to and comfortable with receiving input provided by angel investors.
We invest in solutions that address major problems for significantly large target markets (i.e. a market size of £100m+). Your company must demonstrate a strategy to claim significant market share or revenue. There are plenty of great business ideas – but not all businesses will generate returns that justify angel investor funding.
USE OF PROCEEDS
Funds must be used to accelerate your company’s achievement of key milestones that increase the company’s value. We often fund activities that include research and product development, building a sales and marketing infrastructure and hiring key executives.
We look for companies that can grow quickly and manage the scale necessary to succeed. Your company must demonstrate a plan to generate significant profits beyond the initial product idea. Do you have a strategy to achieve multiple sources of revenue?
Your company must have some proprietary features that distinguish you from potential competitors or provide barriers to entry that prevent other companies from capturing your customers with a similar offering. Attributes that convey competitive advantage include intellectual property protection, key know-how, and scarce human resources (i.e. knowledge and skills).
The Members of Irrus Investments have significant executive experience in a variety of fields. One of the benefits of working with angel investors is the active coaching and contact network that such investors can provide. As such, there must be a fit between our Members and your team and idea.
We prefer to invest in first-of-a-kind new ideas, rather than incremental enhancements to common products and services. Is this a nice-to-have, or a need-to-have product or service? However, we approach highly complex, esoteric technologies with caution. The concept behind the technology must be proven and verifiable. Further, we avoid science projects that don’t demonstrate a clear path to commercialization.
Our Members typically seek returns of at least ten times their initial investment, within seven years. This level of return on investment is essential due to the high risk and likelihood of failure among early stage ventures. Thus, a clearly articulated exit strategy – how angel investors will gain such returns – is essential. For example, do you plan to sell the company to an established corporation in your industry? Or will your exit be through subsequent rounds of financing – venture capital or the public markets? Angel investors are not just interested in the strategy you select, but more importantly in the how – the operational strategy that shows specific steps you will take to achieve the exit.
If, after thoroughly browsing our website, you would like to officially apply for funding, you should complete our application form.
You will be asked to provide a brief overview of the business, telling us about:
- Your technology, any IP, and why it’s better than the competition
- Traction so far / planned route to market and your business model
- Funding until now, how much you’re raising and at what valuation
- Whether you envisage further funding rounds being necessary in the future
- Upload a business plan and relevant documents
We will decide if your company should be invited for an initial screening presentation at one of our regular deal flow sessions. Please note that we will only invite you to one of these sessions if we believe you have a realistic chance of securing funding from our Members, therefore a significant proportion of applications will be turned down without Irrus Investments ever meeting you in person.
DEAL FLOW SESSION
At these sessions you will be invited to pitch to some of our members. This will take the format of a 20 minute pitch followed by a 25 minute Q & A session. Within ten days we advise you whether you have been chosen to pitch at our quarterly members meetings.
We typically have 3 to 4 companies present at our quarterly members meetings where each company has 20 minutes to pitch followed by a 10 minutes Q & A session. Again within ten days we advise you if we wish to proceed to the next stage which is a formal due diligence.
We undertake a rigorous due diligence on all aspects of the business plan and when required we bring in external experts. This process can take up to two months depending on the availability of KOL’s, IP verification, etc.
TERM SHEET NEGOTIATION
After successful completion of the due diligence process, you will be presented with a Term Sheet that defines the structure of the deal and what will be the main terms and conditions to be included in the Shareholders Agreement.