Seed Capital Fund of CNY

Investment Process

Investment Process
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New York's Creative Core

SCF has broad criteria for the types of companies we consider investing in:

  • Company should be located within 1-2 hr drive of at least one of the members
  • Company’s growth should result in wealth creation for individuals in our region
  • Company should be able to deliver a return of 10x or more on fund investment within 3 years, longer timeframe means higher expected multiple on return
  • Preferred companies would have assets (e.g., patents, other intellectual property) that would leave some residual value
  • Companies that are selling professional services or are based on one-off products are not good candidates for investment
  • People running these companies should have a strong track record in business (ideal)
  • Someone in the group should be knowledgeable about the business/industry or technology that is requesting funds

SCF’s engagement with entrepreneurs covers five stages from first contact through successful exit:

1. Entrepreneur Self Evaluation - Are you ready for angel investment?

Download our questionnaire to determine if SCF engagement is a good fit with your business goals

Ideally, answers to these 20 questions should all be “YES” to meet SCF’s suitability requirements. However, for new ventures, a strong “YES” to questions 1 - 12 and 20 with a good start toward “YES” for 13 - 19 would suffice. Two or three “NO’s” does not mean that your venture is necessarily inappropriate for SCF; however, if you have more than this, it suggests that sources of funding and support other than SCF would probably be more appropriate. We will do our best to help you find such resources.

If you are comfortable with your responses, please submit them along with a business plan summary using the “Submit a Business Plan” button to the left of the screen. Please ensure information you are providing includes:

  • Date application was submitted
  • Primary company contact
  • Address
  • Web site address
  • Referred by
  • Date company started
  • One paragraph description of the “Revenue Model” including ownership confirmation and license terms if appropriate
  • Competitive barriers to entry – IP / Trade Secret / Exclusive Alliances, etc.
  • Confirmation by existing or potential customers at prototype level
  • Qualifications of Management Team – track record
  • Investment by Management Team (time / money / exclusive attention)
  • Next two critical Milestones
  • Potentially biggest barriers to achieving Milestones (major risks)
  • Investor likely exits and timing
  • Current financing and terms
  • Accountant’s name
  • Lawyer’s name Discussions with what other investors – term sheets – reason(s) for rejection(s)

2. Business Plan Review and Member Presentation

The summary information is reviewed and promising candidates are invited to present to a screening committee. The screening committee determines if a company is ready to present to the full membership. This decision point is arrived at within 2-4 weeks of initial contact.

3. Due Diligence and Investment Decision

Following presentation to the full membership, a vote is taken to determine interest in launching due diligence. This involves a small group of SCF members spending more time with the company to examine various aspects of the business and reporting back to the full membership with an investment recommendation. This decision point is arrived at within 8-10 weeks of initial contact.

4. Funding

Companies selected for investment are offered a term sheet and funds are made available following successful conclusion of these negotiations. This decision point is arrived at within 12-15 weeks of initial contact.

5. Post-investment Oversight and Assistance

A representative from SCF is designated to work with the company’s management leadership in an advisory or governance (director) capacity. Through this relationship, the wider resources of SCF members can be accessed to drive a successful investment outcome. Examples of post-investment SCF support include:

  • Objective counsel and experience - SCF members will have “been there” before.
  • Personal support and enthusiasm - Entrepreneurship can be a very lonely experience.
  • Networking leads - SCF members get their calls returned, to open doors for you.
  • Prescreening other deals - Have your own investment banker and deal maker.
  • Keeping focus - It’s all too easy to follow familiar rather than necessary paths.
  • Professional surgery - Members cut to the core of an issue, thus saving time & money.
  • Link to community resources - Members know where the high value resources are.
  • Presence and image - SCF members are community leaders and add credibility.
  • Entrepreneur biased funding - Deals are designed to be in the entrepreneur’s interest.
  • Deeper pockets - Individual members are able to provide the next stage of funding.

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