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investment process

 

O
ur investment process is driven by experience, efficiency, transparency, professionalism, and fairness. We expect two-thirds of our investments to be institutional venture rounds led by a top-tier venture firm. By exception, we will invest in early stage businesses with a strong lead investor and outstanding management team. We do not lead rounds, set valuations, or take Board seats. Our Investment Committee is composed of 10-15 of our investors with long careers in the investment and entrepreneurial ecosystems. We meet regularly to evaluate new investment opportunities.

New Investments

Most of our investment opportunities are direct referrals from people associated with Purple Arch Ventures: individuals within our community; investors in our funds; or other Ambassadors that work in the broader private equity and venture capital industries.

We conduct a thorough, yet efficient evaluation process. We often leverage the experience and judgment of relevant Northwestern alums during our diligence process.

If you know of an interesting company where one of the executives is an alum of Northwestern, please contact us. We would love to begin a relationship. If you are a Northwestern alum investment professional who wants to learn more about how we can be helpful, please contact us.

Investment Criteria

  • Northwestern connection: A Northwestern alum as a founder, executive, Board member, and/or investor
  • Demonstrated product / market fit
  • Strong team
  • Large market
  • Clear differentiation and defensibility
  • Attractive metrics relevant to particular industry and sector
  • Growth
  • Top-tier lead investor

 

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Portfolio Composition

This is a high-risk, high-reward asset class, so diversification is wise. We invest in 15–25 deals over the course of 12–24 months, leaving ourselves up to four years for a few follow-on investments. That means that in two years, most of an investment will be divided over a portfolio of about 20 companies, placing a number of “small bets” on a diverse group of companies.

Deals/Due Diligence

We participate in a variety of deal stages and structures. Our early stage deals (less than 30% of our portfolio) are often convertible notes with caps or SAFES. Later stage deals are typically priced rounds with an institutional investor lead. We evaluate deals that already have a lead investor and that are definitely getting done, and our Investment Committee advises on a final decision.

Decision Making

Our Investment Committe—consisting of smart, experienced investors—meets about 8-12 times a year. In these two-hour sessions, we look at 2-3 deals (typically selected from 20-30 prescreened investment opportunities). We make our due diligence reports and recordings of our IC meetings available to all investors.

Northwestern Alums Investing Together

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