Seed Capital From Angel Investors: Kindra Tatarsky, Director of Operations, Golden Seeds (Part 4)

By guest authors Irina Patterson and Candice Arnold

Irina: Do you try to estimate a particular return over a particular period?

Kindra: Of course. That’s part of the entire process. We look at an anticipated return to see if the return makes sense for an investment and the valuation x return makes sense, so absolutely.

Irina: What’s your target return?

Kindra: Well, we target a 10x return over a three- to five-year period.

Irina: At what stage of a business’s development do you prefer to invest?

Kindra: Validated business. We do not invest in business plans.

Irina: And you said the total addressable market should be around $1 billion?

Kindra: Yes. The addressable market. Not the market that we think the company is going to get, but the addressable market in which they operate.

Part of our due diligence process is to determine whether a company can be a significant player within an addressable market. For example, if we invest in a company with $1 million in revenue and we aim to exit somewhere between $20 million and $50 million in revenue, we’re assuming that the acquirer is going to want to have further opportunity to grow it to be $200 million. So, you want to assume that the company is going to have an opportunity to be a $200 million to $300 million minimum revenue opportunity.

Irina: Do you ever invest in niche markets?

Kindra: We invest where we see there’s an opportunity. So, if there’s a return opportunity and a segment of the market that we understand or in which we have expertise to offer, then we would be interested in investing.

Irina: Do the entrepreneurs have to have previous business experience?

Kindra: Not necessarily. A proven entrepreneur is usually a strong entrepreneur to get behind. It’s certainly a plus in her favor, but we don’t rule out first-time entrepreneurs.

Irina: So would you look at somebody who is straight out of school?

Kindra: Yes, absolutely. We have someone coming to our forum right now who’s a senior at a university.

Irina: Do you require complete business teams?

Kindra: It’s very rare that a company has a complete team just because they lack the funding to do so. We like to see that there is a team, a couple of people at a minimum. We like to see more than just one person. But there’re always holes.

Irina: So, you help them to complete their business teams?

Kindra: Absolutely.

Irina: Are there any character traits that you’re particularly looking for in a founder?

Kindra: I wouldn’t say there’s any one specific trait. If I had to pick one, it would maybe be openness, open to ideas, open to hearing feedback, open to adding expertise to complement her own expertise. That’s something that I think is a winning characteristic, but there are many. I would not say there’s just one.

Irina: What do you do with the businesses you don’t invest in?

Kindra: We try to give feedback to all companies. So, if it’s as simple as, “You’re too early. We can’t invest now because you don’t have any paying customers,” or “You haven’t achieved market validation,” or “Because you haven’t even gotten the product ready, we can’t really assess whether there’s something of interest” all the way to, “You’ve got market validation and customers and you’re generating a couple million in revenue but we don’t think it’s scalable,” we always try to offer feedback.

Irina: Do you have any sector preference?

Kindra: We are sector agnostic. We have investments across all sectors, consumer products, life sciences, technology, Internet business. We have a whole host of different types of investments.

Irina: What about e-commerce?

Kindra: Yes.

Irina: Do you invest in mobile applications?

Kindra: Yes, absolutely.

Irina: What type of investments do you prefer?

Kindra: We participate in preferred shares.

Irina: Do you have any exits already?

Kindra: Golden Seeds made its first investment in 2005. And we’ve had a few exits already.  Our largest exit was Design2Launch with a 10x return. It was bought by Kodak. We sold another called TikaTok, an online company that enables children to create their own books, to a strategic buyer. We’ve had a couple other exits as well. We have two different technology companies that were sold. One was called RedPath [a pathology services company that integrates traditional pathology practice with molecular genetic analysis] and the other was SolidWare [helps to ensure and improve software quality].

This segment is part 4 in the series : Seed Capital From Angel Investors: Kindra Tatarsky, Director of Operations, Golden Seeds
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