We are pleased to know that our portfolio company has encouraged you to seek our partnership. WAVE’s investment approach has remained unchanged from the start except in one aspect. We have increased our average allocation for each portfolio company from $10-15M to $15-20M in the latest fund, which allows our companies to utilize more professional resources for accelerating initial growth. However, each investment case is unique. So, even though our investment goals and approach remain consistent, the terms of engagement are different for each company.
We have been making money for the past 15 years with the core elements of our strategy, utilizing our experiences in industrial operations, manufacturing and energy finance. We have built many successful companies and have a track record of sourcing, selecting, mentoring and harvesting profitable investments. Each member of the team brings varying degrees of operating experiences in the industrial and energy sectors and most have invested across technology sectors for a decade or longer.
Our investment strategy entails a holding period of 3-5 years. When companies own platform solutions, we can structure the companies to generate multiple liquidation events for the founders. In most situations, the founders should begin to realize returns within 5 years from the date of initial investment. We expect that a majority of our portfolio companies will exit via corporate acquisitions (M&A), and selectively through public offerings (IPO).
You should expect a qualification statement within two weeks from a WAVE partner after you submit your information. One of the benefits of having a very precise investment strategy is that it leads to quick assessment of strategic fit. WAVE makes no more than three new investments in a year, so the due diligence process is very detailed and can take several months. We encourage you to contact us directly without worrying about a personal recommendation.
The entrepreneurial process is never easy, but we bring several resources to the company that ease the process of business execution. In order to ensure strong execution, WAVE develops the full roadmap from funding to exit and obtains the company’s commitment to an up-front contract. During due diligence, we bring in resources that will help the company implement more efficient systems for manufacturing, supply chain, distribution, marketing and sales. We also pay close attention to managing the IP portfolio with a view to maximizing its application in existing and new markets.
Many attributes make us unique. We prefer manufacturing entities over software applications, deploy sizable capital in fewer companies, feel comfortable with incomplete management teams, like companies that are not yet profitable, and avoid companies that have raised capital from several high profile investors.
These attributes allow us to follow an investment approach that unlocks the full value of an innovative product or business model. If you are looking for an investor who understands industrial innovations, knows how to scale manufacturing and distribution, and opens doors to prospective customers and capital providers, WAVE will appeal to you. The WAVE model allows your innovation to influence multiple markets most speedily and efficiently. It also has the potential to generate greater financial rewards for the founding team.
Please see the page “Investment Criteria.” We like companies that are in early stages of growth and are seeking equity capital to meet overwhelming demand from a growing body of repeat customers. They offer superior solutions at lower cost and higher gross margins because they use less resources more efficiently. Their competitive differentiation arises from proprietary, transformational innovations that have demonstrated scalability and commercial viability.
If you can satisfy the following questions, WAVE would be interested in talking with you:
- Is this a proven, superior solution with clearly owned IP?
- Does it address significant customer needs at lower cost?
- Does it have demonstrable and sustainable competitive superiority?
- Does it require changes in user behavior, policy, or market structures?
- Can it generate a winner in one or more billion dollar markets?
- Can it yield realistic exit options and distributions in 3-5 years?
When a company has already raised capital from several other institutional investors, it becomes harder for us to execute our investment strategy. WAVE will consider participating in later institutional rounds only when we see a strong alignment of strategy with the company’s Board and management.
WAVE typically leads a Series B round of investment with $5-10M initial investment. It expects to provide a majority of the growth capital of the company over time. Over time, it would invest $15M – $20M in a company, and could deploy additional capital for commercializing the product in new markets. Very often, we are a company’s first institutional investor.
WAVE is a private equity firm that provides growth stage investments. As an equity partner in your business, WAVE will provide both capital and strategic guidance to accelerate your business growth. In return, we will ask for an equity position in the company in proportion to the risk and the amount of investment. Therefore, you do not have to repay the capital; rather, our stake is tied to the future performance of the business. We take a very active role to ensure successful business execution. However, you should see us as a coach and a close confidante, rather than as a member of your executive team. We harbor no illusions as to who creates success—you alone fashion your path to success, while provide ideas, resources and cheerful motivation along the way.
No. WAVE does not invest in project debt/equity. It owns companies that have differentiated proprietary IP and an ability to build large scale operations with modest equity.