For the Opportunity Fund, we are looking for category-defining companies that are ready to scale. These companies may be new to KV or in our existing portfolio.
At this stage, we assume that you have already hit the milestones outlined in our Seed and Main funds. Technology risk has been mitigated through a substantially proven and sustainably differentiated approach. Scalable business economics, including in terms of profitable customer adoption, is established. You have a strong team in place that has a track record of building large businesses. At this stage, you are looking at scaling operations globally to gain maximum market share and reach profitability. This is likely one of the last venture rounds you will take.
What is the long-term vision for the company? What is the key problem you are trying to solve or new market solution you’ve successfully created?
Has your technology proven that you have an unfair advantage in the market with a history of customer execution? Are there iterations of this technology that allow you to enter new markets? Are there safeguards against the patents for this technology?
Is the team you have the strongest in your industry that will allow you to scale the company? Are you the long-term CEO of this company as it gets closer to an IPO? What are skill sets that might be missing on the current team? How strong is the team in recruiting and retaining key talent? How robust are the team’s relationships with customers, partners and influencers in your industry?
At this stage, we take a very detailed view on your financials and look at areas like customer acquisition costs - both today and how they are likely to scale, manufacturing costs and unit economics over several years. We like to see quarterly financials for the next eight quarters and annual financials beyond that.
Given the rocky nature of markets and slips in product timelines, we ask about contingency planning on these financials and if you have sufficient runway. Also, will this financing get you to cash flow positive and by when?
At this stage, we believe you have a very strong idea of how large your addressable market is today and what it can be 2-3 years down the road. Don’t confuse addressable markets with industry size. Is your business addressing a subset of the market and if so, why will you be competitive in that segment. What will open up additional segments for you? We like to understand the nuances of your market.
We believe you know who your existing competitors are and the ways you can gain market share from them. What are the ways you believe you can continue to win in your segment? Who are the new competitors as you expand into new segments? What are the threats that could make the market opportunity obsolete? Who are you not thinking of that could disrupt your business entirely?
What Doesn't Matter: Opportunity Fund
“My company is a copycat of XYZ”
If your plan is built on copying, we are probably not the right fit for you. We seek out bold companies that will be impactful to society. If your pitch is “we are just like Airbnb” in the hotel space, we are not interested.
“My company is an acquisition candidate after this financing”
An acquisition may be a reasonable outcome but if that’s the goal, we’re also not the right fit. We invest in entrepreneurs who want to build category-defining businesses that aim to become profitable and public.
“Government Subsidies will help me win”
While subsidies bring cash flow, they seldom create markets or build your business. At this stage, you should have minimal reliance on them and your product must be competitive without subsidies.