Sramana Mitra: Is the woman decision maker in the purchasing decision critical?
Kerry Rupp: It is critical. Not all decisions are always going to be made by women, but they are in markets that are dominantly women.
Sramana Mitra: We’re on the same page so far. Talk about geography. Where do you like to invest?
Kerry Rupp: Definitely US-based entities just because we are a small fund. We are based in Austin, Texas, and there’s a lot of opportunities here in Texas. There actually aren’t any other funds with a specific gender lens in Texas. We spend most of our time in going to events and co-working within the State. We’re pretty mobile in going to Dallas, Houston, and San Antonio. We will take deal flow from anywhere.
Ultimately, we’re about choosing the best investment for our fund. We do have to consider that we are looking to lead deals and take Board seats. A deal that’s going to require us to fly somewhere else, we’ll have to think differently about it. We have a company in Southern California already in our portfolio. We’ll certainly look at deals that come in from anywhere. We just have to evaluate them slightly differently in terms of making sure we could engage at the level we want to.
Sramana Mitra: What check size do you like to write?
Kerry Rupp: We are a seed-stage fund so we’re investing in the seed round although there is some latitude to look at bridges in the A’s. We tend to be lead investors in a price equity round. Those checks are generally $250,000 to $500,000. The way we’ve modeled the fund is, we’ve reserved two-thirds of the fund to stay as follow-on in most of the companies. We expect to stay in nine of the deals through their Series A and maybe three of the deals through their Series B. It’s not just the first check.
Sramana Mitra: What needs to be in place before you’re willing to write the smallest check?
Kerry Rupp: That’s where we start getting into the qualitative area where there aren’t always black and white lines although that female member has to be already on board. We don’t look at teams that are open to or interesting in looking for a woman team member. We are looking at companies where that person’s already in a very integrated part of decision making. That might mean the company coming back to us in six to nine months when they’ve sourced the team member that’s a fit. That’s a mission critical one.
We are true seed investors in that we can invest pre-revenue and pre-product. Like all investors, the more risk reduced in the equation, the more appealing the investment can look. We want to see that the company has the ability to execute. If they don’t have a live product in market yet, they’ve got a prototype or they’ve shown the ability to create that. It really depends on the specific market whether the product needs to exist.
In some of the healthcare scenarios that we’re looking at, even if they’re going to consumer, they’ve got to be getting through the FDA process or engaging with healthcare systems. Those can be really long cycles. We don’t always wait until that process is all the way through if there’s other metrics that show engagement of those entities and the processes are under way. Certainly we want core team members with clear path towards execution.
We’re not looking at things that still have, what I would call, binary technology or science risk. In the health space, if there’s a perceived new approach to do something and yet the critical trials still need to be done in order to prove it, then it’s too early for us. We’re focused on businesses where the opportunity is proven and now it’s about execution. There are some black and white areas there. We don’t look at things where there is still something fundamental to be determined.