Due diligence: Before Cantilever invests, we demand thorough due diligence either on our own, with our investing partners, or through the Keiretsu Forum.
Often, the due diligence takes the form of working with and inside of the portfolio company in various advisory, business development, executive, or support roles.
We get to know the founders, their strengths, their products, and their intentions for the business while we identify and help to address areas and issues that create investment risk.
Real-world solution: Commercial success in any business requires a strong product-market fit. Cantilever focuses on this area early, demanding evidence that the company thoroughly understands its potential customers, their pain points, needs, and wants, providing a solution that is practical, marketable, and commercially viable. A great solution that no one wants to pay for is not a great investment.
We promote a business model methodology that objectively analyzes real world, real customer, face-to-face interaction to identify and tailor potential solutions to a profitable market. Cantilever often directs founders towards participation in National Science Foundation based Customer Discovery programs including the exclusive and extremely demanding National I-Corps. Members of the Cantilever team have participated in this intense program as embedded Mentors for several of our investments and led many more through local introductory versions of the national program.
Team: We look for strong teams – this may be past experience and history, but many founders are on their first journey. Working with and within the organizations, and alongside them as they identify their customers, partners, and commercialization opportunities, we get to know the founders and their teams.
Attitude, motivations, abilities, and coachability are evaluated. While some may consider this subjective, guesswork, we form our views based on experience: we have to trust them to invest in them. We pick great people to de-risk or our LP investment.
Consensus: While we will sometimes make an investment on our own if thoroughly vetted and sufficiently de-risked, we prefer to invest alongside well-established and successful investing partners.
We look for companies that are also supported by individual investors or Angel groups that we know and trust. Folks that have done their own vetting, analysis, and sometimes hands-on development of these early-stage opportunities.
More people have scrutinized, more perspectives have been satisfied, more questions asked, more risks identified and addressed, and more long-term investor resources are available to enhance the likelihood of success.
Special Sauce: There are a lot of good companies with great solutions. The ones that build wealth are the ones that have something extra in the early stage. This can include exceptional IP, secure revenue streams, first mover, or early dominance in a field or some other substantial or insubstantial “wow” factor.
Whatever it is, we want to be excited about something when explaining why we want to put our name on a cap table.
Returns: Of course, the end goal is high multiple returns on our investments. We evaluate each opportunity meeting all of our other criteria for their likely returns over time, only considering those with outstanding prospects. Only when we have qualified a selection of good companies, we commit to just the best of the best.
Interested in exploring investment or partnership opportunities with us?