By guest authors Irina Patterson and Candice Arnold
Irina: Do you invest in teams straight out of school, or do you require previous business experience? If only with experience, what level of experience do you require?
Paul: We much prefer teams with experience, but that experience doesn’t need to be at a certain level of office.
Irina: Do you invest only in complete business teams, or does a single founder also have a chance?
Paul: One person probably won’t cut it, but if that person has assembled a smart team in the core areas at least, then that’s good enough for us. He needs to show that he can pitch the business to clients, employees, and investors.
Irina: Are there certain character traits of founders that could clinch the deal?
Paul: No, it’s a package and they need to be well balanced in a variety of areas – functionally, socially, and intellectually.
Irina: What, if anything, do you do about businesses you come across but don’t invest in?
Paul: Unless it’s a complete turkey, we refer it on to other groups we know. The East Coast investment community in particular tends to be very collaborative and as such, we share deals all the time.
Irina: Do you have any sector preferences?
Paul: E-commerce, Web 2.0, Web 3.0, and mobile and social media applications.
Irina: Would you invest in deals that can go on generating dividends over a long time? Or do you only invest in companies that have a fairly early exit strategy?
Paul: We look for exits in approximately three to four years’ time, and we’d only expect capital gains, not dividends.
Irina: What is your preferred investment type?
Paul: Equity or near equity, such as convertible debt, warrants, and so forth.
Irina: Do you do debt financing? Convertible? Non-convertible? Terms?
Paul: Yes, convertible notes predominantly.
Irina: What exit strategies did you have in the past?
Paul: M&A, that’s it.
Irina: Do you have a preferred exit strategy?
Paul: Preferably one that allows the company to continue growing, and one that keeps a home for employees and management team who wish to stay.