Bringing an Emerging Markets Fund Deal Home
April 20, 2021 | Ashley Brindamour
Alumni Ventures’ Emerging Market Fund (EMF) invests in companies from emerging venture markets in the U.S. and around the globe. But not only do EMF investors own a portfolio of ~20-30 promising companies, they also enjoy an added benefit of Syndications: choosing to invest extra into some of those companies if they like.
To show you what’s involved in the investment process, here’s the real-time story of a company being added to the EMF and syndicated to our investors. Because the company is not yet public, we can’t disclose its name. We’ll call it “Horizon.”
Fund Now Open
The Emerging Markets Fund offers investors a way to further diversify their portfolio: through geography. The fund will invest in ~20-30 companies outside of major U.S. VC hubs — Silicon Valley, NYC, Boston — or are based/largely doing business internationally. To learn more, click below to review fund materials or book a call with a Senior Partner.
Step 1: Sourcing
All companies that go into the EMF are first sourced by one of our actively managed funds. In this case, Horizon was identified by Nassau Street Ventures, our fund for Princeton alumni and friends of the community. We routinely use the contacts of our team and our Alumni Ventures network of ~550K subscribers and supporters to identify opportunities.
The Nassau team first ensured that an established investor was leading the round and had negotiated terms (our standard practice). They also quickly reviewed the company — and liked what they saw about Horizon:
- Tackling a large emerging market in healthcare with a proven business model
- Offering a far superior alternative to existing solutions
- Being led by an outstanding team with the right entrepreneurial and clinical expertise
- Demonstrating great revenue growth
Step 2: Vetting
With that preliminary review complete, Nassau decided that Horizon was worth a closer look. Here’s what that due diligence process looks like.
- Speak to the CEO as well as the lead investor
- Review company materials
- Review due diligence materials provided by the lead investor(s)
- Consult experts with relevant backgrounds in our network
- Discuss the opportunity with sibling funds and our Office of Investing
- Conduct our own written due diligence. That involves looking at the team, company, market, customer value proposition, competition, as well as the lead investor and terms — and then scoring the company.
A company must receive a score of 80+ (out of 120) to be added to the Alumni Ventures portfolio. Horizon scored 87. Terms, investor syndicate, business model, capital efficiency, team, and more scored very well.
Alumni Ventures’ Emerging Markets Fund offers accredited individuals the opportunity to invest in promising, venture-backed companies from emerging markets in the U.S. and internationally. Learn how our Investment Teams source and vet companies that fit this thesis during a roundtable hosted by Larry Warnock, Managing Partner of Ring Ventures (for the Texas A&M community). Larry will be joined by Erik Hammer, Senior Principal of Purple Arch Ventures (for the Northwestern community), and Krithika Kumar, Principal of Strawberry Creek Ventures (for the UC Berkeley community).
Step 3: Cross-Checking
Once the Nassau team vetted Horizon, the company was vetted by:
- Nassau Steet Investment Committee. These investing and business professionals (generally alums) review diligence, interview the CEO, and vote on the investment opportunity.
- Alumni Ventures’ Investment Committee. This group of Alumni Ventures senior executives, as well as Managing Partners from funds also investing in the company, all score the deal.
Again, Horizon passed. To put this into perspective, Alumni Ventures looks at about 500 investment opportunities a month, does diligence on ~100, and only about 25 are approved. We completed about 250 deals in 2020.
The Alumni Ventures Deal Pipeline
Step 4: Becoming an EMF Investment
Nassau Street committed to the investment. They also suggested that it be added to the Emerging Funds Market, since the company was serving the Latin American market. To secure approval here, it had to be vetted by the Nominating Committee. This group of Alumni Ventures investment professionals reviews the company not only for fit with the EMF mandate but for portfolio balance. Horizon was approved.
Step 5: Syndicating to Investors
Nassau then suggested the company be syndicated to EMF investors. Syndications are offered to investors only after a lead Alumni Ventures fund has committed to investing and negotiated extra allocation. We then offer the opportunity to investors through their Venture Clubs.
Every fund has a Venture Club. If you become an investor in this fund, you will become a member of the Emerging Markets Fund Venture Club. This is an online platform exclusively for investors where they can
- get updates about the fund and portfolio,
- sign up for webinars and discussions,
- and learn about venture and entrepreneurism.
Club members will also see about 5-8 Syndications each year. These are chances to commit more to an investment in your portfolio where you really like the company or find it helps fill a gap in your portfolio.
And that brings us to where Horizon is now. We’re launching a Syndication for Horizon and will invite investors to explore our due diligence, discuss the opportunity, and make up their own minds about investing. The minimum investment amount for the Syndication deal through the Venture Club is $10K. This will be a fast-moving opportunity open and closed in less than a week, with investors serving as active VCs.
Step 6: Up to You
If the thesis of the Emerging Markets Fund and our process are appealing, please feel free to click the button below and explore more about the fund. If you’d love to get in on the fund now to check out our Horizon Syndication, book a call with a Senior Partner.
Alumni Ventures’ Emerging Markets Fund offers a portfolio of ~20-30 promising, venture-backed companies from emerging markets in the U.S. and internationally. It’s a chance to further diversify your portfolio, seeking opportunities in rapidly growing regions where there are outsized opportunities.
To learn more, click below to review fund materials or book a call with a Senior Partner.
Contact firstname.lastname@example.org for additional information. To see additional risk factors and investment considerations, visit avg-funds.com/Disclosures.