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The investment criteria are modified based on which source of capital will be used to complete the financing. At this time, Sentient Ventures is primarily investing out of the:
Mirco Private Equity and Micro Subordiated Debt Funds
- Market focus (equity) - Drawing from the team's previous venture capital, industry, and operating experience, the focus of the fund's equity investments will primarily be buy-out transactions.
- Specifically excluded markets - Retail sales, real estate development, financial services including insurance, banking, or lending, and professional services provided by accountants, attorneys, or physicians. However, the fund will look at both low tech and high tech investment opportunities.
- Significant market size (equity) - Large (i.e., greater than $500 million) and growing markets that allow revenue for the portfolio company to expand to $100 million or more within five years.
- Documented event within 36-60 month horizon or the proven ability to service a note (debt) - Either the paperwork for a set of receivables, additional financing round, M&A transaction, public offering, and/or another form of cash transaction must be in process and/or a significant history of receivables must exist that justify the repayment of the debt.
- National or international in scope is preferred - However, a focused regional business is more often the focus of our debt investments.
- Manageable competition - Up to three similarly funded companies in the same market validates the existence of a manageable space. However, if the company says it does not have competition, then the appropriate market research has probably not been completed or the market is too early in its development.
- Fundamental sustainable differentiator (equity) - The fund only considers equity investments in companies that have a significant intellectual property position or the equivalent barrier to entry that enables each company to maintain a long term competitive advantage.
- Top-tier management team - The management team is a crucial part of the investment equation at every step of the portfolio company's maturation.
- Good chemistry - The personalities, work ethic, and open-mindedness of Sentient Ventures and the company must be in sync in order to enable a close working relationship.
- Headquarters - Portfolio company is headquartered in Texas or relocates its headquarters and principal business operations to Texas within 90 days, and intends to remain in Texas after receipt of an investment.
- Size - Portfolio company does not have more than 100 employees and at least 80% of its employees reside in Texas or pays 80% of its payroll to Texas residents.
If the potential portfolio company meets the investment criteria, then due diligence continues to the next step in the investment process.
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