What Solvable Syndicate likes to invest in

Finding potential investors for your startup (in databases etc) isn’t hard. Finding investors which are a good fit for you can be very time-consuming. We wrote the below to help you understand what Solvable Syndicate looks for, and how we decide what startups to invest in.

What’s Solvable Syndicate’s investment focus?

We invest in pre-seed, Seed, and Series A stage startups in FoodTech/AgTech on a global basis. We’re impact-focused and aim to advance an environmentally sustainable, nourishing food system — here’s why.

Our average ticket is $100K, and we’re typically the last money in (meaning we don’t lead rounds or negotiate terms; we come in when the lead investor is confirmed and terms are set).

When we see a startup that fits the above criteria, we move on to the next crucial step:

Does this startup have strong enough signals to resonate with our members?

In a Syndicate, the ultimate decision-makers are not the Syndicate Leads (the Partners running everything) but the members. Whether a Syndicate has dozens, hundreds, or thousands of members, they decide what they want to invest in.

In Solvable Syndicate most members are individual angels, and they’re attracted by certain deals that send strong signals. As Syndicate Leads, we therefore aim to identify, due diligence, and get allocation in investment deals (startups) with those signals. They are not must-haves; having strong signals just make things a lot easier.

#1: Lead Investor

When Tier 1 investors / VC firms (generalist or FoodTech/AgTech-focused) or well-known angels lead or co-lead an investment round, this creates powerful social proof that validates the investment opportunity. Our members interpret this as a quality signal that mitigates the perceived risk.

The ticket size of the lead investor also matters (the bigger, the better).

#2: Traction and Growth Metrics

Startups with strong sales growth is a key factor to Syndicate member investment decisions. Companies growing faster will simply generate more interest. As Paul Graham has noted, “a company that grows at 1% a week will grow 1.7x a year, whereas a company that grows at 5% a week will grow 12.6x.”

There’s also a hierarchy of traction, from growth in revenue / ARR, to contracted ARR, to paid pilots, to unpaid pilots, to trials, to LOI’s, to customer pipeline. Startups that can credibly show they have strong traction at the top of this hierarchy have got a big advantage.

#3: Founding Team

When the startup team has an outstanding founder, e.g. a serial entrepreneur with previous large exits under his/her belt, this is a powerful signal which can make a decisive difference.

Founders with C-level experience at leading public companies or startups also matter, especially at the pre-seed / Seed level where Solvable Syndicate invests, because at this stage there may be few other existing signals (such as revenue or investors).

— — —

To summarize: If a Tier 1 investor leads a funding round with a meaningful sized check, and the startup has an exceptional founder with a track record of building successful companies, and the founder’s current startup is on strong growth trajectory, this will generate Syndicate member excitement.

If a startup doesn’t have strong signals, it’s not a dealbreaker. As Syndicate leads, we can somewhat help shape syndicate member interest in a startup by clearly articulating in our Investment Memo why we’re excited about the startup, by offering Q&A calls with the founder etc. A lack of strong signals just makes closing the deal more challenging.

Next step: Our Investment Evaluation Framework

If we determine that a startup shows several strong signals, we then run the investment opportunity through our Investment Evaluation Framework. While the list below isn’t exhaustive, we look at things such as:

• A clear now: Why is now a good time to start this company?

• Is this a first-time founder or a serial entrepreneur — maybe even a team of serial entrepreneurs with complementary skills?

• What is the impact potential of this startup, in terms of improved environmental and/or nutrition outcomes?

• Is this product/service 10x better than what already exists?

• Moat/defensibility: Are there trade secrets, IP, brand, network effects, or other things that make this product/solution hard to copy by competitors?

• Market size: How big is the market in 5 years? (Ideally $10B+)

• Unit economics (margins, LTV/CAC ratio — depending on the business model).

• Will we be able to eventually exit this investment?

• Does the company have a history of sending regular investor updates, monthly or quarterly? (Many of Solvable Syndicate’s members want to learn from and want to help startups they invest in, but cannot do so if they don’t receive any company updates).

• Conflict with existing investment? Sometimes there could be conflict-of-interest to invest in a startup too similar to an existing investment of ours.

If we’re still comfortable, we move on to full Due Diligence.

Due Diligence

At this step, we do one or several calls with the startup founder(-s), and ask for access to the Data Room. Using in-house and external expertise, we consider a range of things on a deal-by-deal basis, such as e.g:

• Corporate records

• Team references

• Product testing (if a FMCG/CPG product)

• Consumer interviews

• Market research

• Competitor research

• Digital footprint

• Prior investor updates

• Legal/accounting

• Financials

As long as no red flags or major concerns appear during the Due Diligence stage, we draft up an Investment Memo and present the startup / investment opportunity to our Syndicate members.

Every year we look at 100s of startup investment opportunities, and invest in fewer than 10.

— — —

If you’re a startup founder and feel your company could be a good fit, you can apply for funding here.

And if you’re an accredited investor (e.g. angel or family office) who wants to join Solvable Syndicate, apply here.

IMPORTANT DISCLOSURE: Most early-stage investments result in partial or complete loss of capital. Past performance is not indicative of future results. This information is provided for illustrative purposes only and does not constitute an offer to sell or solicitation of an offer to buy any securities. Any offering of securities would be made only through private placement memorandum, subscription agreements, and other related documents.