We invest in highly talented management teams with the vision, drive and appetite to meet the challenges of early-stage business development.
Entrepreneurs of all backgrounds will be considered for funding, not only graduates of Cass.
Businesses must have some revenue traction, and will have typically received a first round of concept-stage or seed funding.
Initial investments range in size from £100,000 to £500,000, depending on the stage of business development, the funding structure, and the overall finance requirements of the investee company.
Given our background and networks, we tend to be more focussed on B2B businesses, but have previously backed successful management teams in the B2C space, and remain open to such opportunities.
The Cass Entrepreneurship Fund can act as a sole investor or as a lead or minority co-investor with other institutions, funds or private angel investors. We will typically circle a level of funds for follow-on investment rounds, which will be considered on a case by case basis as the company grows.
The Fund has a cross-sector investment remit, but requires that businesses are headquartered in the UK.
We are a patient investor, but like any Fund will want to understand exit and liquidity options for the business over the years ahead.
In general, we seek to understand the opportunity for a business to be sold in a trade sale, rather than via an IPO. It is important for us to understand how a company's strategic value will grow over time, and the acquisition dynamics of a particular sector, or the M&A process of a particular acquirer.
We have listed some of our thinking in more detail below to help management teams or company representatives to better understand our typical criteria:
Management: We back driven individuals and teams, willing and able to work with investors over the life of the investment. Teams should be committed to the business for the long term and be suitably rewarded for commercial success.
Market & Competition: We favour growing, sizeable, addressable markets. However, we understand there can be real value in challenge niches - companies do not need to be seeking to solve a 'global' problem to capture our attention. In any case, management should have a credible plan to win market share. It's important to clearly articulate the nature of the competition, dynamics of the market and key differentiators of your business.
Product or Service: We are open to products and services that offer incremental improvement to the status quo, or elements of disruption. For the further development of existing technologies, or development of new ones, companies should provide a clear roadmap detailing how the technology will be rolled out commercially.
Customers: Products or services should have an identifiable and addressable market, supported by clear evidence that it is solving unmet customer demands or needs.
Financial: We require some financial traction to progress investment discussions. Businesses will typically be generating in excess of £100,000 in annual revenue, or an equivalent, sustainable run-rate. As a Fund, we seek well thought-through revenue plans with reasonable growth assumptions. It is very common for early-stage businesses to fall short of their revenue targets, so it is important that management remains ambitious, plans and prepares for this and understands the financial effects on the business of such shortfall.
Funding Requirements: We generally invest in companies with the intention that current funding round will provide 12 - 18 months cash runway. A company shouldn't typically require significant, multiple, further rounds of funding to become self-funding or to achieve some form of liquidity event.
Valuation: As a Fund, we seek a commercial return on our investment, which in turn requires that initial valuations and expectations of valuation growth reflect that in a fair manner.
Use of Funds: Companies should clearly outline the use of funds raised. Whilst the Cass Entrepreneurship Fund is open to funding a range of plans, in general these relate to accelerating onboarding of key hires, expanding sales and marketing resource and contributing to further product, service or general business development.
Liquidity events: Although we are a long-term partner and a patient investor, the Fund has a commercial remit and seeks a target investment return. Accordingly, business plans should be clear about key commercial or financial milestones required for the company to achieve meaningful growth in value to likely buyers or secondary financiers.
We have a small, experienced investment team, and manage an efficient, professional investment process.
Please take time to review the key investment criteria and to get acquainted with our approach and activities. Send us an executive summary or pitch deck at the first instance and we can take discussions forward from there.
We do manage a formal investment process, and you should expect to undergo a level of commercial and financial due diligence as well as implementation of standard legal deal documentation. We approach diligence and documentation in a thorough, but cost-effective and efficient manner. As part of the investment process, we receive support and feedback from our Investment Committee.
Once an investment has been finalised we look to build a close relationship with the investee company and will appoint a non-executive director and/or an observer to the Board. Investee companies will be expected to provide monthly financial and commercial updates, and to implement a formal board structure if one is not already in place.
We aim to form real partnerships with businesses, and to provide guidance and support alongside funding.
With external insight, advice and guidance, supportive of a talented and ambitious management team, Cass can help deliver successful outcomes for the next generation of growth businesses.