7 Percent | help not hinderance with early stage tech investing

More question and answers about how we invest are below. Basic information on our investment strategy and the types of startups we invest in is here.

A potted history

7percent Ventures was founded in 2014 and invests in early stage (usually pre-Series A) tech startups which represent a billion dollar opportunity. Seeking out the most ambitious founding teams, 7percent invest in startups who can transform a market.

The founder is our customer, whom we support using our own entrepreneurial experience and with a highly curated adviser platform: 7EVN.

Rate of growth differentiates startups from other types of business and 7% represents a week on week growth rate which usually means your startup is doing something right; that growth KPI should ideally be one of revenue, or if not then a proxy for revenue, some other metric which will define future value in the business; e.g. user base.

Seven is also a lucky number!

Are we actively investing at the moment?

Yes, though our rate of investment has slowed a little currently as we’re raising a Fund II (much as growth rate can suffer in a very early stage startup when the Founders are focused on raising institutional money rather than everyday business building, so does our outreach and pace of deal flow).

However, if you have something exciting contact us or grab our attention and we’ll do our best to be responsive. If you have already contacted us and we’re not as responsive as you would have expected, we extend our sincere apologies, it’s certainly not for lack of trying!

Why are we called 7percent?

7 is a lucky number. There are also seven fundamental types of catastrophe ..and we’d like to help you avoid catastrophes.

The actual etymology is that rate of growth defines a startup over traditional businesses. 7% represents a weekly growth rate which means your startup is doing very well. A weekly 5-10% growth rate, ideally of revenue but if not of some other metric which will define future value in the business (e.g. user base) is generally recognised as a measure of good performance in an early stage company; Paul Graham Founder of Y-Combinator wrote at length about startup growth here.

Focusing on key growth metrics enables an early stage startups to avoid distraction and clearly track the impact of iteration, product optimization and success or failure of product/market fit.

Failure to focus on growth rate early on means you can be distracted by lots of things which will keep you and your team busy, they might even be genuinely important, but with limited cash runway (and thus limited time) every hour counts towards demonstrating — through an aggressive growth rate with a curve up and to the right — that you’re solving a painful problem for a someone in a great way, and have found a scalable way to go to market with that solution, even if initially in a specific vertical, segment or territory, of your SOM.

Why are we different?

Our mantra is to help not hinder your startup. This is a guiding principle in everything we do.

We have also brought together seasoned entrepreneurs, specialists and corporate operators, who can add value or specific knowledge at the right time in the right way for your startup, via our platform: 7EVN. They also serve as a network for introductions, joint ventures, enterprise customers and eventual M&A.

If you take investment from 7percent you’ll also have access to:

  • Other Founders in our portfolio
  • The experience of our entrepreneurial Partners and Venture Partners, who are nearly all ex-Founding entrepreneurs themselves, rather than ex-bankers of finance bods
  • At least once a year bringing everyone together into one place for a weekend of shared experiences, discussions, learning and fun
  • An invitation to an ICE List founders group trip
  • Soft introductions to follow on investment via our network

All decent investments funds have a network of friends, colleagues, trusted suppliers and alumni to call on. 7percent is different because in addition to that network, we have:

  • all run successful and failed startup businesses
  • all taken angel and venture capital investment (for better or worse) for our own startups and have benefited from this learning experience
  • are from diverse tech sectors, spanning a variety of industries
  • have a transatlantic reach in the startup ecosystem, from West and Eastern European to North American
  • friends who are experts from the top startups (Facebook, AirBnB, and many more) who can help you as advisers

What are typical deal terms for 7percent?

We believe in using standard plain English term sheets with nothing onerous. Terms vary from deal to deal (we’ll be publishing our own standard terms in the near future). Within your business we also like to see implemented:

  • Founder vesting – if not already in place
  • An effective board – three to four people with appropriate experience at early stage is plenty, any more are a distraction
  • Regular monthly board meetings – you might be surprised how many very early startups don’t do this and while it might sound bureaucratic to the uninitiated there are very obvious reasons why these are great for your startup and you as a Founder
  • Weekly – or sometimes monthly – projections for your primary KPI

For some startups, particularly if very early stage we may also ask for:

  • Access to weekly metrics reports – this could be as simple as one number or a WoW % growth rate, sent by email
  • Board observer rights, or a Board seat
    We don’t ever take a board seat for the sake of taking a board seat. A startup’s board must reflect the skills and value the start-up needs at that moment in its life cycle. Whether we ask for a board seat will depend on:

    • the stage of company
    • the existing board expertise
    • how much we are investing and how much value we can add

Who are we?

Read about us here.

Where does the money come from?

The money being invested to date is private money generated by the entrepreneurs who are partners in the fund. We are our own investment committee. We keep operational costs low and do not operate as a traditional VC from the POV of having large fancy offices or big salaries; in this respect at least we operate more like angels than a traditional VC fund. Fund II is being raised from third parties, so we can increase our rate of investment and ensure adequate follow on for the startups hitting it out of the park.

Do you follow on with more investment?

Yes, if your startup is performing we will invest more money.

Open about our thinking

We’ll always be transparent with you about whether we think your startup growth is tracking appropriately. Obviously we’ll also always try and help you solve problems and remove blockers to your success, along the way.

Being specific

We recognise that an investor simply saying you need more traction as feedback on the likelihood of investment or reinvestment is unhelpful.  Whenever possible we’ll give you specific metrics that mean we’ll be able to re-invest, and articulate to you what we believe success looks like, and what the rest of the investor market will respond positively to.

The follow-on rate can be a contentious issue for both funds and startups. For example, some startups have found that the most famous VC names, especially at Series B level, when choosing not to follow-on can create a signalling problem to the market, because if a ‘first tier’ VC won’t put money in, why would anyone else want to? It’s the same reason Y-Combinator started giving a cheque post-accelerator to all their startups, to avoid signally negatively to a specific company which it didn’t cut a cheque to.

The hard truth is that if your startup is making decent progress we’ll reinvest. If your startup is tanking/failing, we probably won’t; but then neither is anyone else likely to.

What we will do is be honest with you every step of the way about how we feel you’re doing, and help you however we can to resolve any problems along the way. Any surprises then, when it comes to the next round of funding. won’t come from us.

Will we lead a round?

We have. We’ve led around 15% of our investment rounds to date.