Bringing transparency to our dealflow process and investment decisions

“In god we trust, others bring data”

To grow as a venture capital fund we support ourselves with data. To the extent that we can capture and analyze data internally to improve.

One of the most critical data points when constructing a portfolio in a venture capital fund is the deal flow, that is, the investment opportunities that we receive. Today we will expand a little bit about this aspect of our business, specifically about where it originates from as well as some other interesting insights to be drawn upon.

In K Fund, as in many other funds, we divide operations into investible and non-investible and with each of these cohorts we do different things.

Let’s start with the easy part. With the non-investible we do nothing more than to tell the entrepreneurs that it is not our type of company. The reasons can be numerous but perhaps the main ones would be:

1. That the company does not match our criteria, for example, companies outside the scope of the internet
2. That the business is not enough “venture capital material” or scalable as such
3. That it’s not the correct timing for us to invest, that be too soon or too late (we invest in companies seeking funding in its early stages in tickets that correspond to minimum €100k to a maximum of €2m.

Needless to say, you have to ask yourself the following question when seeking financing from a fund… Does this fund invest in a company like mine? Is my company investible? Am I looking for the same amount of money that this fund usually invests? You have to burn that bullet when needed!

Going back to the topic that concerns us — after disregarding the non-investible companies we are left with the companies that we think are investible. To the companies that we consider investment targets, we would ask that they fill out a form like this, and we reciprocate by telling a little about us in a docsend like this, and from there the job of analyzing the opportunity begins. In short, it is those companies and that data we will talk about today.

So how many companies are we talking here? Sampling the companies that meet our criteria (typology, scalability and timing) and that have filled out our form from mid-April 2017 until the end of November 2018 we are talking about 1,111 companies, which correspond to 56 companies every month that have met our criteria, filled our form and which we have analyzed.

And where are they from? They are spread between opportunities in both Spanish and foreign companies.

And the Spanish ones? Which three main blocks are they coming from? (2018 data)

And what percentage are less than half a million euro and what percentage is more ? We are as interested in operations that already have metrics as we are in those that doesn’t. So this would be the breakdown, of course half a million euro does not mean anything, but somewhere the line must be drawn to asses if we attract projects of one kind or another.

And how many formalize? How many operations are made out of the total universe we have analyzed? What are your chances?

If you are a startup looking for money from a fund this is something to think about. How many deals does a fund formalize? The short answer is “few”, the analytical answer is that of 1,26% since we started capturing data. (and remember, that percentage are among the companies that match our criteria and fill out the form, the others doesn’t count)

With that, the realization should be that if you are looking for money from a fund your chances of obtaining financing are small among others as you are all competing for the same money.

And how long does it take to close a deal with us? We also capture data to address that question and we believe that by sharing them you can also draw interesting conclusions for your startup.

With Data

• How long does it take from the first contact until the K Fund decision is made? — An average of 93 days
• And from we say yes until we have finished negotiating with your startup and with the other investors? — An average of 45 days
• And from the point in time we say yes until we sign at the notary? — An average of 42 days
• How much time does due diligence constitute of this time? — An average of 29 days (Needless to say, those days are included in the previous timeframe, the previous 42 days)

To provide more transparency with respect to the companies, please find below a graph outlining all our investments but with numbers instead of the name of the startups.

Hope this helps!