Seed Capital From Angel Investors: Jeff Clavier, Founder and Managing Partner, SoftTech VC (Part 6)

By guest authors Irina Patterson and Candice Arnold

Irina: In the past twelve months, how many investments have you made?

Jeff: In terms of new investments, not follow-ons, I did twelve.

Irina: What was the average dollar amount that you invested?

Jeff: Those were between $100,000 and $200,000.

Irina: On average, how long does it take for a company to receive funding from you?

Jeff: Either I will get a company where I’m one of the first investors that they meet and we’re chatting about doing something together so, I will need a couple of weeks to make up my mind. Sometimes it takes me much less than that. Sometimes I’ve told an entrepreneur yes right there.

Typically, it can be that they have a round being put together and there are people I trust who are already involved, who have done a lot of due diligence. I can call them and ask them what they have already checked. If it’s satisfactory, I will make a decision pretty quickly. I may have done the right there once or twice . . . twice, I think. And then there is the actual process to go through closing.

Depending on whether you raise money on debt note or on equity, debt is pretty quick to close. Equity takes a couple of weeks. So from the initial meeting to getting the money in the bank, I would say, it’s a few weeks.

Irina: What is the average valuation of a company you invest in?

Jeff: It depends on the founders. Are they first-timers? Are they experienced entrepreneurs? Is it a big market that you see immediately? Or is it like you’re building your team, you’re building your product and there is potential at the end but it’s still very early.

What I can tell you is I never invest if I can’t price the company at at least $2 million, because a company that I can’t price at $2 million hasn’t done enough work and isn’t ready for me to invest.

My minimum price is $2 million. I’ve done a bunch of $2.5 million pre, $3 million pre, $3.5 million pre, it depends. Some companies will be more mature and will be worthy of $4.5 million pre, and in some cases I get involved in larger rounds.

Today, we announced one of my latest investments, BillFloat, which is a really interesting, exciting opportunity. The company raised $4.5 million.

I’m a seed-stage investor, so valuations are by definition early-stage valuations.

Irina: What percentage of a company’s equity do you usually seek?

Jeff: It’s a few percentage points. I don’t have a number because, once again, it depends. Based on how much I’m going to put in and what the valuation’s going to be, it’s going to be a few percentage points. It could be two, three, four, or five. I don’t have a set target.

This segment is part 6 in the series : Seed Capital From Angel Investors: Jeff Clavier, Founder and Managing Partner, SoftTech VC
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