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Raising funds from Katalyst Venture Partners (London)
By Jon Gillespie-Brown | November 21, 2006
Katalyst are a fund raising "agent", they are run by Anthony Collinson and are a professional group that hand selects potential investments to present to their network of investors.
They only choose Companies based on strict criteria and generally you will need to satisfy 3 directors that you are at the right stage, in the right market and have the right valuation before they will consider you for one of their investment days.
- Katalyst focuses on early stage business opportunities in market sectors where its Independent Investors and Directors have relevant knowledge and experience.
- Prefer to lead investment round and supervise the due diligence process
- Investments range from £250,000 to £1m of equity with an average of £400k
- Enterprise value under £10m
- All sectors considered
- Early stage, Expansion and Development, MBO, MBI and turnarounds
- Geographical preference primarily UK with bias to England and Wales
You need to be aware these type of outfits will not guarantee any raise, this means that while they take a risk on trying to get funds for you they also cannot guarantee their investors will like your offering – this is a risk for both parties because they may not get you all the funds you need and they will lock you into an agreement that prevents funds coming from other areas until after the lock in period (usually 10 weeks+).
Their process is as follows:
They aim to back 4-6 companies each year with enterprise values of £2m to £10m. The Executive Directors of Katalyst make decisions as a team. Good opportunities are fast tracked and presented to Katalyst’s clients, i.e. its affiliated Independent Investors.
The investment process consists of the following steps:
- Katalyst executives screen opportunities and makes recommendations
- Katalyst Independent Investors evaluate the proposition
- Katalyst executives complete the deal on behalf of the Independent Investors
They will not invest in an opportunity unless they can:
- Understand the industry
- Work with the management team
- Leverage the network of Katalyst Independent Investors
- Add management value
The costs of working with Katalyst will be a 5% success fee plus legal costs to finalise the investment. This is not unusual for this type of outfit and for the effort they put into due diligence is quite reasonable compared to other groups that wish to charge an up front fee as well.
I found working with the team useful and interesting, they are very thorough and professional but they are not technical and are highly focused on viable companies based on their ‘numbers’ and growth story rather than IP or technology. A word of warning however, do not count a deal done until you receive full heads of terms and see the money.
The pitch day consists of 2/3 companies presenting in the City of London followed by questions from the investors themselves. If this goes well then some commitment can be gained on the day with closing of the process usually within 4 weeks.
The success rate is very high, unlike many of the pitch days at other events, as the companies are carefully screened.
Katalyst are most successful in raising in the range of £100-400K of equity funding. They are also good at helping with follow on funding from the same investors if the original investment goes well. They are happy to syndicate with others to make up a larger round too.
http://www.katalystventures.com
Last 3 posts by Jon Gillespie-Brown
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- Choosing a "Stanford quality" startup idea–part 2 - October 11th, 2011
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About the Author: |
| Jon Gillespie-Brown is a published Author, Lecturer, Founder/CEO and Mentor on Entrepreneurship. He currently mentors at Stanford, UC Berkeley and the London Business School. Visit his site for tips by email/twitter, blog updates, detailed articles, worksheets, news, a free quiz and more! Go now to http://www.tobeanentrepreneur.com/ | |
