Aspremont have recently completed a successful raise for environmental technology company Safe Solvents. They raised £1.36m of a targeted £1m raise, £288k of which was sourced through Crowdcube investors.
While VCs, Accelerators and Incubators are all playing their role in growing early-stage companies, despite there being some common grounds, Aspremont takes several different approaches. Oliver Lyons, Aspremont Partner, explains how Aspremont differentiates itself in a competitive market.
A unique approach to due diligence
Investment professionals working for Venture Capital funds typically take a portfolio approach to the companies they choose to invest in, relying on a few ‘winners’ to achieve their returns.
A Kauffman Foundation study shows the long run return of VC firms is only 1.31x invested funds – and when a few exceptional performers are stripped out, the returns are lower.
Company developers and operators such as Aspremont’s co-founders, who have successfully built, operated and exited businesses, have a wealth of experience to draw upon, and such experience can give operators a greater ability to assess the likelihood of an early stage business succeeding.
Experienced company operators tend to:
- Understand the key drivers of value in a business
- Be more pragmatic about growth assumptions and what it really takes to execute a plan
- Be a good judge of the founder’s character and whether they have what it takes to succeed
Operators have an ability to get ‘under the skin’ of a business idea and can challenge the founder(s) by asking questions which are insightful and demonstrate innate understanding.
As opposed to a typical VC’s portfolio approach, Aspremont uses a unique lens to identify a potential SMARTCO, spending a large amount of time with the company to conduct a deep behavioural due diligence prior to any formal engagement. During this process, we employ a right-to-left methodology process to challenge the business’s vision of where it expects to go, and to determine whether the business has the right fundamentals to be successful and whether the founder(s) are the right people to make it happen.
During this pre-engagement process, Aspremont does pro-bono but valuable work to redefine the company’s business model into a viable and scalable ‘Something-as-a-Service’ model, and redefines its commercial and financial strategy. If while doing this work Aspremont can’t clearly define a path that drives the company towards a minimum £50m valuation within 5 years, it won’t formally engage with the company. Similarly, the founders of the company shouldn’t engage with Aspremont if they’re not convinced during this time that Aspremont can help build the business into something much bigger than they can achieve alone.
A deep bench of highly experienced, long-term support
There is a proliferation of Accelerators and Incubators providing valuable short-term support to founders, however they do not provide the long-term mentoring and support typically required to deliver success.
SEIS and EIS investment funds give investors access to a portfolio of companies, but typically have little ability to influence the path to success.
One of Aspremont’s core differentiators is its belief that the key to turning great visions into great companies is to provide highly experienced mentoring and resources to founding/management teams available 24/7 over at least a 5-year period to guide, support and drive management consistently to deliver success.
Unlike many professionals running today’s VCs, Accelerators and Incubators, Aspremont’s founding partners and chairman are highly experienced company developers, operators and investors. Having done the journey of founding, building, investing in and exiting companies several times over (and having made hundreds of mistakes along the way) they’ve learnt an equal amount of lessons to pass onto the talented entrepreneurs of the future.
Alignment of fees
Our fee structure is also differentiated. Aside from certain investment monitoring fees that are recharged to a company, Aspremont provides its core service in exchange for equity options which vest over the 5-year period of our service contract, ensuring total alignment of interests with founders and management. This alignment ensures capital is sourced efficiently and cost-effectively, to minimise dilution and retain management control.
Aspremont has a dedicated capital-raising and investor relations function. Having been investment bankers as well as successful entrepreneurs prior to founding Aspremont, our founding partners have between them raised hundreds of millions of pounds of capital directly from investors for the businesses they’ve been involved with. This brings a capital-raising pedigree and expertise for its portfolio companies that is rarely seen elsewhere in the early-stage market.