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Angel Investors Spotlight: An Inside Look at Hudson Valley Startup Fund’s Investment Process & Advice for Founders

Hudson Valley Startup Fund brings together a network of the region’s successful business and community leaders to give back, supporting the launch of the next Hudson Valley visionaries. We sat down with fund managers Chad Gomes, Johnny LeHane and Paul Hakim as they shared insights into their investment process, what they look for in both group members and startups, and

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angel investors spotlightHudson Valley Startup Fund brings together a network of the region’s successful business and community leaders to give back, supporting the launch of the next Hudson Valley visionaries. We sat down with fund managers Chad Gomes, Johnny LeHane and Paul Hakim as they shared insights into their investment process, what they look for in both group members and startups, and their advice to founders.

HK: Tell me a little about Hudson Valley Startup Fund.

HVSF: Hudson Valley Startup Fund is the first seed capital, member managed fund in the Hudson Valley. While we are based in Rhinebeck, we operate throughout the entire valley, and hold our monthly member meetings at Marist College, in Poughkeepsie. We started forming during the summer of 2015 and officially launched in October.

What is Hudson Valley Startup Fund’s investment philosophy? Why did you form this new type of group?

Before we formed Hudson Valley Startup Fund, we were the only region in New York State without an angel fund or member managed seed capital fund. It was a gap in what we, and others, saw as an important piece of creating a vibrant startup ecosystem in our region.

We created a group that is member managed so that everyone is involved in all decisions – whether it is screening, due diligence, investment, or pre/post-investment support. The three of us as fund managers fulfill the administrative and operational functions of the group, and so far, have seen this as a much better way to invest, especially regionally. We are able to bring so many more minds to the table, with so much experience and expertise, to really support companies to be successful.

As you continue to grow, what do you look for in new group members?

First and foremost is a passion for having a positive impact in the Hudson Valley, supporting founders that are launching fast growth businesses in the region. We want to continue to build upon our diverse group of angel investors with people who are interested in not only ROI but also taking an active role in helping companies be successful. We are also attracting angel investors who are interested in sidecar investments in the companies we fund.

How does your investment process work?

Right off the bat, we have some very basic criteria: 1.) The startup should be located in the Hudson Valley or have a direct impact on the Hudson Valley. 2.) The founders should have “skin in the game” in terms of personal investment of money and time. 3) Founders should be looking to scale – we are not interested in helping create lifestyle or passive income businesses. 4.) The company needs to either be early revenue or at least achieved proof of concept.

For companies that meet the basic criteria, we ask them to apply to us via Gust.com. Once an application is in, our screening committee, which currently consists of 8 members, reviews all applications. During screening, we focus mostly on their Executive Summaries and the Presentations on their Gust profiles. We have found Gust to be a really great system to streamline our process. We simply tell prospective entrepreneurs to put everything on Gust.

During screenings, we generally select two companies to come present to our members each month. Every member has equal say on who moves forward to due diligence.

Are there certain sectors or industries your group tends to invest more heavily in?

No, we purposely cast a very wide net. And we have, and continue to build, a membership that has experience in a variety of industries. In only a few months, we have seen soft tech, hard tech, construction, and food.

What are the main elements you look for when screening startups? Do you have any advice for founders on how to stand out?

We have two main recommendations for entrepreneurs. The first is around their presentation. It is important to recognize that the angel investors screening startups often don’t have time to read through each startup’s entire business plan. Instead, many screening committees focus on key pieces of information like the presentation, executive summary and team overview. Founders should keep in mind that their pitch deck on Gust doesn’t have their voice over, so all slides need to be informative and clear on their own. A good way to address this is to add a video pitch to their Gust profile so their presentation includes audio. They can also upload a version of the presentation under Documents that includes talking points, walking investors through the pitch deck in more detail. The important thing is getting all the content that would normally be part of a founder’s pitch in front of us.

Our second recommendation for entrepreneurs is that they clearly state how much they are asking for and how it is going to be used, in detail.

What characteristics do you look for in the founders you invest in? Is there anything that raises a red flag?

There are a few traits that stand out to us. First, we look for founders who have passion. We also prefer co-founders who have some experience, really want to build something, and are receptive to being helped. One of the greatest benefits we offer is our support and expertise, so we look for founders who are looking for thought partners.

Conversely, not being able to accept guidance makes us extremely cautious. Also, because most startups involve co-founders, we watch their interactions very closely. We want a dynamic that is able to survive tough times. So if they don’t seem like they work well together or have clearly-defined roles – or even more of a red flag – give us conflicting answers to our questions, that can kill a deal pretty quickly.

What are best practices for a good pitch?

First of all, entrepreneurs should state what they are looking for right up front. The screening committee will know, but the rest of the members want to know this before they get into the rest of the details. We want to hear “At this stage, we are looking for $X for the next Y months to get us through Z.” Then, founders should be concise and able to distinctly answer questions about the value proposition, goal, what they currently have, how much they are asking for, and what they will do with that investment. Founders should answer all questions directly even if that answer is “I don’t know.” They can then follow up with more color, but as a best practice, they should always be direct and straightforward.

Additionally, the best pitches are when the founders know not only how they are going to use the funds but where exactly the funds are going to get them. It shows us that the entrepreneur really understands how they need to use our investment to get them either to the next stage of funding or to profitability. And it is that level of critical thinking we like to see in our entrepreneurs.

A best practice we have seen work extremely well is when startups take the time to demonstrate their product during a pitch. Showing the demo helps investors get to that a-ha moment and gives us confidence a significant amount of work has already been done.

The final best practice is to find a way to ask the angel investors what they are bringing to the table beyond the monetary investment. Entrepreneurs that do it tactfully show that they are not just desperate for money but that they’re truly concerned with finding the right founder-investor fit. One way to approach it is to ask “What would it be like working with your group after you invest?”

Is there any question you repeatedly see founders unable to answer?

Where we really see people struggle during follow up questions is when we ask them where they need to be to get to the next round of funding or to get to profitability. People are able to say that they will last 6 months with this funding and get further, but then unable to answer what “further” means – showing that they really haven’t thought it through.

Is there any additional advice you would give to founders?

Here’s some things not to say during a pitch:

  1. We are the only ones doing this and there are no competitors
  2. We’ll get 50% of the market
  3. We have zero marketing costs
  4. Once we build it, they will come
  5. We are going to pay ourselves a full salary from day one

Anytime investors hear any of those in a pitch, they get immediately turned off. Those kind of statements aren’t reasonable or feasible.

Finally, here’s an additional piece of advice, not related to funding. When you’re creating a founding team, realize that you’re marrying your co-founders. This is not a casual relationship. You don’t just jump into it. This is something that’s going to be several years, longer or possibly life. Do that with your eyes wide open and realize that the relationship you had previously will radically change when you start a business together or join as partners.

Source: http://blog.gust.com/angel-investors-spotlight-an-inside-look-at-hudson-valley-startup-funds-investment-process-advice-for-founders/

Private Equity

Lorax Capital Partners pulls in $142m for its sophomore fund

Lorax Capital Partners has pulled in $142m for its sophomore fund and has named Apex Group to supply administration and corporate services.

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Lorax Capital Partners has pulled in $142m for its sophomore fund and has named Apex Group to supply administration and corporate services.

The fund, LCP II, has a target size of $250m and will focus on midcap companies in Egypt that are focusing on local consumption and production as well as financial inclusion.

Lorax will also back companies that are looking to expand regionally.

The investor aims to implement high-quality governance and environmental and social practices within portfolio companies and help them increase their value creation.

There have been five LPs to commit to Lorax’s new fund, so far.

Lorax Capital Partners director of operations Adnan Razzak said, ”We appointed Apex due to their strong reputation and ability to provide the all-inclusive fund administration, accounting and investor reporting services required across multiple jurisdictions.

“We have been particularly impressed with their ability to guide us through regulatory challenges and our decision to domicile the fund in the Netherlands. Our management team has an unmatched track record in sourcing, executing and managing transactions in Egypt and Apex’s support will enable us to focus on these core competencies.”

Founded in 2015, Lorax is an Egypt-focused private equity firm and over the past five years it has deployed around $175m into five companies.

Last year, Lorax aided Helios Investment Partners and Enterprise Fund with their purchase of a 96.6 per cent stake in agricultural seeds provider Misr Hytech Seed International.

Copyright © 2020 FinTech Global

Source: https://www.altassets.net/private-equity-news/by-news-type/fund-news/lorax-capital-partners-pulls-in-142m-for-its-sophomore-fund.html

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Private Equity

Lobby group for Black women urges firms to ‘go beyond solidarity statements’

The 300-strong group calls asset managers to build an anti-racist portfolio, divesting from companies that benefit from business models that perpetuate racial inequities

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Industry group Black Women in Asset Management has published an open letter calling on institutions to promote racial equity through their portfolios — and take action if companies they invest in do not.

The letter comes as the City took a hard look at racial diversity within its ranks over the summer this year.

“As Black women professionals in the asset management industry, we call on investment firms and institutional investors in our industry to go beyond solidarity statements and instead commit to action, activism, and accountability to dismantle the racial inequities plaguing society,” the letter, released on 26 October, reads.

The death of George Floyd at the hands of three police officers in the US on 25 May and the disproportionate impact the Covid-19 pandemic is having on people from Black, Asian and Minority ethnic backgrounds triggered Black Lives Matter protests around the world, including in London and elsewhere across the UK.

In response, financial services firms and their executives made statements saying the sector could do better and promised to fight for a better society, although activists have said that actions speak louder than words.

BWAM, the industry organisation that counts 300 members, was founded in May 2019 by Jacqueline Taiwo, principal at TowerBrook Capital Partners, and Mariam Akanbi, senior legal counsel at ARCH Emerging Markets Partners.

“Dismantling systemic racism creates a more sustainable and equitable society. However, investment firms have been slow to see racism as a serious investment risk,” said Taiwo in a statement, explaining why the group decided to pen the letter.

The open letter makes five recommendations for investment firms and institutional investors. These include calling on firms to build an anti-racist portfolio, which would entail setting metrics to examine a company’s demonstrable commitment to racial diversity.

Following the research, the group subsequently urged asset managers to divest from companies that benefit from business models that perpetuate racial inequities or target vulnerable communities, citing examples like prison labour and immigration detention.

BWAM also highlights the necessity for communication of expectations to portfolio boards on considering racial implications on strategic decisions, pointing out that this is already the case on issues such as climate change.

Other recommendations include committing resources to encourage young Black women to work in finance as well as advocating for policy change both externally and internally.

“I believe BWAM’s recommendations provide a meaningful framework to bring about long overdue change in our industry,” said Adebanke Adeyemo, general counsel of Vantage Infrastructure and a member of BWAM’s impact committee, said in a statement.

“I am publicly endorsing this letter because I know that many of my peers may not feel empowered to do so. I have been there in my career and I understand it.”

To contact the author of this story with feedback or news, email Bérengère Sim

Source: https://www.penews.com/articles/lobby-group-for-black-women-urges-firms-to-go-beyond-solidarity-statements-20201026

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Private Equity

Dunkin’ reportedly in talks with PE-backed group to go private

The deal worth $8.8bn with Inspire Brands, owned by private equity firm Roark Capital, would delist the coffee and doughnuts chain

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Owner of Arby’s, Buffalo Wild Wings could buy company in deal worth $8.8bn

Dunkin’ Brands Group is reportedly in talks to go private in a sale to private equity-backed Inspire Brands.

The New York Times reported Sunday, 25 October, that Dunkin’, the parent company of the former Dunkin’ Donuts and Baskin-Robbins ice cream, could sell itself for $106.50 a share, a 20% premium over Friday’s closing price, for an implied market value of about $8.8bn. The Times said a deal could be announced as soon as today, 26 October.

Inspire Brands, which is backed by Roark Capital, owns a number of restaurant chains, including Arby’s, Buffalo Wild Wings, Sonic and Jimmy John’s.

In a statement to the Times, Dunkin’ confirmed that there have been preliminary talks over an acquisition, but a deal is not certain and neither side will comment further unless the transaction is finalized.

Dunkin’ Brands has more than 13,000 franchised Dunkin’ locations and about 8,000 Baskin-Robbins locations.

Write to Mike Murphy at AskNewswires@dowjones.com

From Dow Jones Newswires

Source: https://www.penews.com/articles/dunkin-reportedly-in-talks-with-pe-backed-group-to-go-private-20201026

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