We receive a large number of invitations to invest in new, exciting companies. For us to manage our evaluation – our selection, the structure of investment and support that we give those entrepreneurs we do decide to back – we like to work in a particular way.
We are flexible, but we need a strong process too. We know that your time is scarce, so a well-structured process will benefit you too.
1. Get to know each other early
It takes time to get to know each other, to form a strong partnership grounded in real knowledge about what we both want out of your venture. For this reason we would propose that you make contact with us early, ideally long before you would consider an investment from us.
But, if you haven’t heard of us before and are already out, raising finance, please do not hesitate to reach out to us. Both of us will just have to invest more time, during a shorter period, to get to know each other.
2. Your business plan
For us to consider an investment in your company, we’ll need a good quality business plan from you. It will provide us with information about you, your company, your offering and your target market. It will also provide us with a good indication that you’ve put aside enough time to reflect on your venture and where you want to take it.
The business plan does not have to be like an encyclopedia. In fact short and sharp is often better.
3. Review and discussion
If we like your business plan we will review it in detail and enter into a dialogue with you to evaluate its viability and determine if we would like to work together. This step will include an in-depth review of your product/service, analysis of your target market, numerous meetings with all your team, and most often contacts with your customers and strategic partners. During the evaluation you may be introduced to members of the Spintop Network who have experience and expertise that are relevant to your business.
4. Forming our team
We are strong believers in teams. Therefore, we will always seek to appoint two persons to each investment, in most cases one person from the Investment team and one person from the Spintop Network. Both will have knowledge and experience matching the needs of your company.
This arrangement will provide more value to you as well as help us to do a better job. But, we will of course utilise the entire Spintop Network, when and if needed, to give you the best support possible.
You can learn more about the team at Spintop in the About section.
5. The term sheet
If, after conclusion of the review, we think that your company represents a strong investment opportunity for us, we can see clear ways to add value as active investors, and (most importantly) we feel that we can all work together – then we will outline our proposed investment in a Term Sheet. A Term Sheet is a non-binding offer outlining the terms for an investment by Spintop.
We are fans of specific and precise Term Sheets. Our Term Sheet will include all major terms and conditions of our proposed investment so that we can address important issues early on. Our Term Sheet should provide you with a good understanding of what our investment and support for your company would look like.
6. Due diligence
Following the signing of the Term Sheet by all parties we will enter into the due diligence phase. Due diligence means that we check and confirm the information provided during our evaluation, for example checking that customer and partner contracts are in place as presented, the IP protection is there, etc. In addition, the due diligence will also include checks about the governance of the company.
7. The investment decision
The decision to invest in your company will be taken by the Spintop Investment Committee. For us to invest, the decision needs to be unanimous. When investing we typically take the view to continue to invest in your company in subsequent future investment rounds.
8. The investment documentation
When we invest we do so with the ambition of building a hugely successful company with you. A not unimportant part of this success is getting all the corporate documentation up to a high international standard. This often entails us supporting you and your venture to put in place professional shareholder agreements, internationally recognisable articles of association, and a balanced investment agreement that signals good legal protection for both founders and external investors.
9. Establish the business
We would like our initial investment to provide for the firm establishment of your company. Normally, this would include closing and delivering on the first significant customer contracts or establishing a position in the first geographical market, depending on the nature of your business. This phase will often include intensive work on the business model, offering, distribution, pricing etc, to present a business that is truly competitive and ready to scale. Just as importantly, we will work together to establish the business processes and organisation necessary to support a rapid expansion. Should the investment benefit from other co-investors alongside us, such investors would normally come from the Nordic region.
10. International expansion
When your company has established a position with the first target customers or geographical markets, and completed the formation of a business that can scale, we will support the international expansion.
We have an extensive global network that can help your company connect with decision makers at potential customers and business partners, as well as other resources to grow your business. As we have been through numerous rapid international expansion efforts before, we would also be pleased to support and guide your company throughout this phase.
A major international expansion effort often requires further external financing that we would want to participate in (typically together with co-investors, as the investment needs are often substantial). The co-financing of such international expansion would best come from top-tier venture capital firms active in the target market(s). Thanks to our London partner presence and the previous ventures we’ve been involved in, we have direct contacts with many of the leading international venture capital firms and are well placed to assist with the completion of such financing.
11. Our exit
Although we invest for the long term – we often remain an active investor with our portfolio companies for five to eight years and sometimes beyond – we would ultimately want to exit our investment. This is a natural step, as we are less likely to be able to add any more value as an active investor after such a long time period. Your company will have grown and matured with a complete management team, an established position and proven strategy. An entrepreneurial investor such as Spintop will no longer be needed.
So when the time is right we will seek to exit our investment in your company, while providing you with a strong platform to bring the business forward. That might be as part of a larger organisation, after an acquisition by another industry player, with new later stage investors oriented at expansion and consolidation, or as a listed company following an Initial Public Offering.
12. Life after exit
Our achievement is a direct result of your achievement. We are very proud of the entrepreneurs we back. After many years of working together, throughout both highs and lows, we always aim to part ways as trusted partners.
Our relationship will have been through, and stood the test of, some serious off-road, off-map driving, so we like to remain in contact long after our financial exit.