We started an investment company, so that we can invest our work in startups that we believe in. In this post, we explain how Sangre + ventures works, what we look for, and how we drive growth in the companies we invest in.
Recognizing one’s strengths is usually the starting point for many great things.
We have a proven track record of helping startups succeed - designing and building MVPs for startups and helping them scale up. Quite simply, our process of doing things works great with startups.
During our work together with Futures Platform as their outsourced product development team, the company has gone from 0 to 3M€ pre-money valuation in their latest round. It would have been nice to be a part of that growth in more ways than a supplier.
We’ve helped our clients do it, and we came to the natural realization that we want to be a part of that success. That’s why a year ago, we started a new subsidiary, Sangre + ventures, so we could invest in startups we believe in. (When it comes to Futures Platform, we now have.)
The business case for it? Having ownership in the products and services we create enables us to scale up the business.
How we invest
We’re not your regular capital investor. Our main investment is our own work and expertise. In practice, it is sweat capital that goes directly into the development of the digital service or product.
That’s why we only invest in companies where we can make a high impact as a digital partner. What that means is that we become a close partner of the startup. We work as part of the product development team, complementing the in-house team where they need it with our engineering, design or strategy expertise. We can be the whole digital product development team if needed.
We’re not simply an investor nor a supplier. We’re a strategic digital partner.
What we invest
The nature of our investment is that we do part of our work as “sweat” when the startup partners with us. The value of our investment is up to 100k€. Typically we invest together with angel investors as part of a syndicate.
Let me explain this through a practical example. Startup X needs a 100k€ design and engineering project to build their digital product. They don’t have the in-house team to do it (at this point hiring the whole team is a big risk), and they’re going to use a supplier for the project. They are looking for 100k€ financing to fund this. Instead of purchasing the work from a supplier, they partner with us and we invest 30k€ of our work into the project as sweat equity. The other 70k€ for the project comes from other investors in the financing round.
At some point in the startup’s journey, it makes sense for them to hire the entire product development team in-house. Once that happens, our expertise is no longer needed, and this is when we make our exit. We expect to have increased the value of our investment 20X-30X by this time.
What we look for
The startups we are typically looking at have a valuation under 2M€ and a strong founding team. They align with our mission to build exceptional, scalable digital services that the world needs.
They have a scalable technological innovation and business model. Ideally, they possess deep tech that is hard to copy and an idea that takes the world forward in a sustainable way. They may be in the early go-to-market stages or scaling up their business. Wherever they are, they’re facing critical design or technology challenges - ones that we can help solve.
Of course, like any investor, when evaluating startups we are evaluating risk and return potential. What’s the market potential and competitive landscape? What’s the revenue model? Is the business model scalable?
Most importantly, we’re evaluating the team, the product or service idea and our role in building it. How committed is the founding team? Does the idea us excited? Can we truly create value by getting involved?
And in the end, the idea must pass one question for us to invest in it: Is this part of the kind of change in the world that we want to nurture?
How we create value
When we talk about creating value, we mean making a substantial impact on the success of the digital product or service. To explain how we do this, let me tell a bit about us and what we do best:
- We design digital product and service innovations. We turn those innovations into prototypes and POCs, and we test them with real users.
- We build MVPs, full-service. Or we can bring our UX/UI & Visual design, engineering and DevOps expertise to the table to help you build it.
- We help you with complex architecture questions to ensure your technology is scalable and integrates.
Doing the right things at the right time is critical for growth. Our strength is our experience in creating digital services and developing them continuously with our clients’ business goals and user needs in mind. We’ll help you evaluate your product development roadmap and backlog. This is what your potential investors are also looking at.
We’ll help you figure out what features you really need at each stage, what talent you need to hire, how much budget you need to put in. In other words, what you should do and when in order to reach your goals - whether it’s getting your product to market, closing those all-important sales, landing investors or scaling up.
Sure, we consult, but we’re not just consultants. We’re engineers and designers. We get down to the grit and do the actual work.
We prefer to show over tell, though. Take a look at our work.
Got an innovative new technology or idea for a digital product? We want to hear your pitch. Get in touch and let’s chat over a coffee. Or join us for one of our Sangre x startups Afterwork events.
Read more about Sangre + ventures at sangreventures.fi