1Mby1M Virtual Accelerator Investor Forum: With Evangelos Simoudis of Synapse Partners (Part 2)

Sramana Mitra: What fund size are we talking? What size of checks are we talking?

Evangelos Simoudis: The second part of the question is more important. We invest in every stage if they have a little bit of revenue. We like to see some proof of revenue, some proof that what the company is developing is being accepted.

Sramana Mitra: What is a little bit of revenue? Are we talking $10,000 MRR? Are we talking $100,000 MRR?

Evangelos Simoudis: The investments that we have made tend to have initial revenue of $200,000 to $1 million.

Sramana Mitra: Annual?

Evangelos Simoudis: Yes, annual. If you think about the automotive area where we have a significant number of investments, it takes quite a few months for an automaker to sign a license contract.

Sramana Mitra: There’s a long sales cycle.

Evangelos Simoudis: Yes, but in the intervening time, these companies are doing larger and larger pilots and other projects with the startups. Just to give you an example, we invested in a company called Divergent3D. It is an LA-based company that has developed a data-driven manufacturing system for producing large components of automobiles using 3D printing.

That company, originally, received a $100 million. We invested in the first two rounds. They’re still working on larger and larger contracts. The contracts are multi-million dollar contracts, but they’re still project-based contracts for the OEMs that they’re working with.

Sramana Mitra: What I’m hearing is, this is not necessarily a SaaS business model. You see a lot of large deals that are not necessarily recurring revenue deals.

Evangelos Simoudis: It depends on the industry and it depends on whether the company is a horizontal application or a vertical application. If it’s a vertical application, which industry is it working on. I’ll give you a couple of other examples. We’ve invested in a company called TopOPPS. It’s a Missouri-based startup that is using machine learning and data in order to re-prioritize the sales pipeline of enterprises. It’s a recurring revenue model. It really depends on the industry.

We come in at this level and we write an initial check for anywhere from low hundreds. We don’t take a Board seat. We tend to work with syndicates of investors that we know. Again, the fact that I’ve been in the Valley as an investor for many years helps a lot not only in being invited into certain syndicates but also creating syndicates.

Sramana Mitra: You lead deals?

Evangelos Simoudis: We don’t. I’ve been in the business for a long time. This time around, I feel that I don’t want to be on Boards. We also have a very strong advisory board in the firm. Our advisers are also getting involved with our portfolio companies.

Sramana Mitra: It’s interesting because you’re saying that you do extensive analysis of the companies to find investment opportunities. How does it work? Do you initiate conversations with them and then you bring your syndicate together? Do you recruit the lead investor?

Evangelos Simoudis: It varies. We typically start a conversation with one or more companies in a particular sector. Because of my own background, I tend to have certain ideas on areas I want to work in. We start these conversations. Then if the management team is already talking to other investors, we are introduced and work together. Other times, we bring together a syndicate.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Evangelos Simoudis of Synapse Partners
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