Stoaf III SciTech has a refined business concept drawing on advantages of either professional venture funds (Silicon Valley) or business angel funds. As such, it differentiates itself relative to both traditional fund types (before 2000).
After the millennium shift, angels and micro funds took over early stage financing in the US market from entrepreneurial early stage VC funds. Angels organized themselves often first, later adding a joint fund. Micro funds became a frequent phenomenon in the bust years following the millenium shift. They chose to narrowly specialize in a venture area sometimes linking up with retired GPs of venture funds for advise and co-financing. After the millennium shift, VC funds have had difficulties covering the entire competence range needed in some areas because of growing diversity. Together with increased fund sizes it drove them to make their first round investments well after market entry.
Methodology based on extensive studies of Silicon Valley VC:s
SciTech combines the angel network´s wider investment scope with the VC fund´s tighter partnership and management of operation. In the Due Diligence of a start-up´s business case, we combine angels with area experience with professional assessment skills of General Partners (GPs). The GPs have the sole responsibility of undertaking the investment case analysis and investment design & negotiations. A common language is obtained via internal education and case practising of angels. A strict, step-wise decision-making is practiced based on R&D in Silicon Valley high-yielding funds and in behavioral science on decision-making under uncertainty. We apply Best Market Practises in a well-tested process during the 5-year investment period of Stoaf´s second fund. The process has a proven higher selection accuracy from this Stoaf fund.
Unprecedented deal flow
By and large, trained business angels have their strongest influence on the final investments via their early participation in deal generation and filtering of an annual flow of deal proposals that in the second fund amounted to 400 – 500 start-ups. The SciTech fund with its expanded geographical coverage is expected to get a higher deal flow. Another major difference is that the number of deal proposals referred to the fund is already after three months much higher. Stoaf´s Certified business angels (CBAs) replace a classical US venture fund´s junior partners and their use will also be in the management of ventures, sometimes via board positions.
An important reason for these adaptations of Best Market Practices is that the SciTech Fund invests in B2B ventures, where several of our angels have experiences from key positions in large multinationals.