We operate a staged methodology, which matches our efforts in the evaluation process with the level of detail that we request from you. We shall explain our needs at every stage and do our best to give you honest and straightforward feedback whether or not we are able to invest in your business. Key selection criteria are:
- Team – can we work together, can Qi3 add sufficient value?
- Market – do we believe in the market size & growth rate? And does it meet our criteria for time to results?
- Advantage – can the product/service beat the competition?
- Intellectual Property – are there suitable defences against competitors?
- Business Model – can we agree and deliver a route to market?
The technology / product has to be at a satisfactory level of readiness. We have to believe that we can add sufficient value through our investment (this depends to some extent upon whether the proposed investment is active or passive from our perspective in its use of Qi3 resources beyond cash). There must be no violation of our ethical code.
Why are most applications unsuccessful?
There is a reality to early stage investment. We receive many hundreds of applications each year, and typically invest in up to about four. We thus see it as more helpful to turn down interest at the earliest stage, rather than investing nugatory time and effort both sides. The following remarks are thus for applicants’ general guidance.
As a rough guide, we invest in about 1 in 200 of the businesses that approach us, about 1 in 10 of the businesses that reach Stage 2, and 1 in 2 of those that enter stages 3 and 4.
The main reasons underlying our decision not to bring an opportunity into our investment evaluation pipeline are:
- Business in a sector where we don’t feel we can add value beyond our cash (see Profile)
- Stage of development too early to be investment ready (see Process)
- Failure to convince on initial selection criteria (see above)
- Valuation too high (we need to feel that we would make a return on a successful exit)
- Our pipeline is too full. This bears explanation, as it’s not the applicant’s fault. We are a small team, and each individual investment requires considerable time during the evaluation stage. Furthermore, businesses within our portfolio require support and further investment. All of this means that we feel it unfair to accept a new opportunity into the pipeline if we would be unable to evaluate it with reasonable expedition
- Many of the approaches we receive are impersonal bulk emails received from companies or their representatives who have found our contact details on lists of potential investors. It’s really hard to give fair response to those applicants who haven’t troubled themselves to question whether their approach may be at all relevant to Qi3 Ventures
Our advice is not to become discouraged by rejection:
- Take it on the chin – the stats mean that you will need to approach numerous sources of investment
- Narrow your focus – for the reasons given above, targeted approaches are more likely to be successful
- Listen, really listen, to the feedback you receive from prospective investors and disinterested friends – we are generally decent people who wish you well, even if we won’t invest in you