WHAT IS OUR PHILOSOPHY?
Every investor, whether an angel or VC has a unique approach to choosing their investments in start-ups and how they work with those investments. Our guiding principles on what we bring to the table are built around 3 cornerstone ideas, based on our cumulative years of experience as not only business owners & operators but also as individual angel investors.
3 CORNERSTONES
1. SOT (Swiftness Of Thought)
// As our firm's name implies, a key tenet of our entrepreneurial philosophy is the velocity with which decisions are made and action is taken, whether it’s implementing strategic decisions, executing on plans or allocate belief and confidence in the people we work with. In a world where things change in a nanosecond, we believe that the ability to think critically and quickly to adapting circumstances is a fundamental trait of successful entrepreneurs. That is just as important when working with founders, the ability to trust their ideas, strategy and creativity and to act as a support ecosystem while removing unnecessary barriers. We strive to have our transparency, integrity and behaviour support that philosophy, and seek to have that trust reciprocated.
2. Transferrable business philosophies
// The partners of this firm have worked across a diverse number of industries, which has helped build an even more diverse network of entrepreneurial friends and contacts (who at times not only work as advisors but as angel investors as well). This has cemented over the years our idea that 95% of successful businesses share the same basic traits that are the heart of their success such as a great product or service, a great executive team, a critical differentiator, and a great marketing or branding strategy. It doesn't matter whether the product or service is consumer or enterprise-facing, the same success patterns repeat themselves.
So for us, using our experience and knowledge across product, sales, branding, distribution, team building and finance is transferrable irrespective of the industry of the start-up we invest in. The end result is all the partners can have an operational impact on your idea, regardless if we have experience in your specific vertical. And given how we’re all entrepreneurs who have operated successful and fast-growing businesses, we’ve experienced almost everything any start-up goes through, so we’ll always have a story to tell.
3. Gestalt protocol
// What exactly is Gestalt protocol? Well, it's an approach to how we give fellow entrepreneurs advice using experience sharing. It’s the cornerstone of EO (Entrepreneur Organization) and YPO (Young Presidents Organization), two global entrepreneur organizations with over 10,000 members, of which all the partners of SOT are members. What we learned over the years using Gestalt protocol, is the best business advice we can give is advice that is drawn from our experience, instead of advice drawn from our own judgments or instincts. It has allowed us to empathize and aid other entrepreneurs in an open, trusting, productive and (most importantly) non-judgmental way. And it would be at the core of how we would share our advice with founders.
WHAT WE LOOK FOR
One thing is for sure; we're always evolving our criteria for investment. And it's a good bet we're likely to have a very different approach a few years, even months, down the road than we do now. We pivot and adjust just like founders do.
But one thing that won't change is our transparency. We know your time is precious, and so is ours, so we want to be as open and realistic with founders from our first encounter to ensure that no one is barking up the wrong tree. That's why we want to list out some of the things we look for, to avoid the loss of that precious time. Few things are worse in the angel investing world than knowing from the first minute of a pitch you will be saying no. You need be 100% sure of the people you want to partner with, it's critical for us and it's critical for any start-up who measure their metrics in weeks, if not days or hours. That's why we want to be transparent with our criteria.
KEY CRITERIA
1. Early stage or offering an attractive valuation
// We believe that our utility and our own interest is best served in finding and investing in early stage companies that offer attractive valuations, that can compensate investors for the proportional risk they take on when ideas or companies only have rudimentary traction. It's critical, we can’t stress this enough. A start-up with a high valuation or later stage company is best served by a variety of other financing sources that already exist.
2. Clarity on how funds will be used
// Though we understand a business plan is fluid, or in early stages hasn't been cemented or solidified to the point where it can be used as a compass, we expect (as an absolute minimum) a basic outline of a business plan, a revenue model, and most critically a clear road map on how any funds from a seed round would be used. It still surprises us how often funds are sought during early stages without any concept of how that money will be used. It's a non-starter for us. And we understand there could be a pivot in your business model, but that doesn’t preclude the need for an initial model to exist (and not just a working thesis).
3. Investor information rights
// It's imperative to us that we have access to key financial information, especially when in early stages; every penny can be critical to the survival of a start-up. This is not to micro-manage, it's to understand a start-up's priorities and even to understand the cash flow situation to know if a further fundraising effort needs to be initiated before expected, whether through debt or equity. Goes back to the trust thing.
4. A demonstration of what you do
// There is nothing more powerful to show someone you want to invest in your dream than seeing a demo, or walk-through of your killer idea. Not slides, something tangible. Don’t tell us about your app, show us. A minimal amount of development and viability should be achieved before seeking out funding, and we've seen all kinds of ways viability or traction can be proven. Get creative. It's a simple issue of sound business strategy; a proof of concept will do wonders in getting our attention.
5. Montreal, Toronto, Ottawa or Quebec City
// Initially, geography will matter to us. Being based in Montreal, Toronto, Ottawa or Quebec City is a significant factor in who we invest in. Occasionally, we can extend that to include all of Ontario or Quebec. Why? Like we’ve mentioned earlier, one of SOT’s basic tenets is to provide founders active advice, and to do so we like face-to-face meetings. We’re based in Montreal, so there is a certain radius we’re willing to travel to. It sounds counterintuitive in this digital age, but from our experience, especially in early stages it’s mission critical (less so as a start-up matures). Kicking the tires is important to us. We reserve the right to change our mind of course, there are always exceptions to any rule, but it has to be exceptional opportunity for us to consider breaking this criteria.