MVF Investment Criteria
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MVF's Investment Criteria
Often it can be challenging for entrepreneurs to understand individual investor preferences and requirements, so we’ve endeavored to demystify our unique approach at Maine Venture Fund below. Our website provides high level guidelines, which you can see on our Find Funding page, but for a more granular take, read on!
In short, our criteria for portfolio companies are:
Operate primarily in Maine
Employ <50 people OR generate <$5M in annual revenue
Demonstrate a viable plan for return on investment and impact in Maine
Receive at least 1:1 matching co-investment
Let’s take a detailed look at each of these requirements:
Operate primarily in Maine
MVF defines this as a company registered to do business in Maine that meets at least one (1) of the following criteria:
>50% of FTE employees, including at least one (1) C-suite member in Maine
Maine employee count is greater than the number in any other single state
Company, suppliers, and partners generate significant economic or financial impact in Maine
The third bullet point is somewhat subjective, and is really of a piece with criteria “C” above, so let’s wait and define that later.
Employ <50 people OR generate <$5M in annual revenue
Pretty straightforward. We define “people” in this case as Full Time Equivalent (FTE) employees, regardless of where they are based.
Demonstrate a viable plan for return on investment and impact in Maine
This is the center of the focus in our diligence effort and tends to be a subjective measure based on the professional recommendation of the MVF Management Team and a subsequent approval from the MVF Board. We look at all aspects of the business plan (and yes, a full business plan with financial statements, financial projections, competitive analysis, market sizing, etc is required) and vet the team and governance structure. You can see our diligence process here.
In a nutshell, “a viable plan for return on investment” includes all of the makings of a sound business model, but also requires that a company have an ambitious plan to scale sales to a global market and to return investors’ capital,usually through selling a majority of the business within 5-7 years to a buyer who plans to take the company to the next growth phase. Note: most businesses are not oriented this way (i.e. family businesses, main street businesses, etc), which doesn’t make them any better or worse, but suggests that venture capital may not be a fit.
Companies in which MVF invests are typically in the marketplace with a proven product (i.e. revenue generation and proof of product-market fit) and are seeking to invest in growth. MVF does make some exceptions with pre-revenue companies with stellar teams and a clear path to market, but this is rare.
Last, “impact in Maine” can take many forms. At base, the company must have plans to hire employees in Maine, which creates economic impact. Beyond that, there are many other impact measures that the MVF Board takes into consideration when weighing an investment decision, including whether the company has positive benefits for community, diversity, the environment, and beyond. You can read more about how MVF thinks about impact on our website.
Receive at least 1:1 matching co-investment
Co-investment must be in the form of debt or equity, but is ideally on the same terms as MVF’s investment. In practice, MVF is typically 10-20% of a given round, and we do our best to help connect companies with other potential investors, though companies are ultimately responsible for finding other capital and “herding cats”, in close coordination with their attorney, towards a concurrent closing date for all investors.
If MVF funding is not a fit, we try to steer companies towards other resources in Maine. You can read more about additional resources on our website, or feel free to reach out to us. If you’re an accredited investor interested in being connected to Maine startup companies, you can join our co-investor database.
About Maine Venture Fund
Maine Venture Fund invests in Maine businesses that have the highest potential for growth and impact. For more information, visit maineventurefund.com.
Inquiries:
Terri Wark
Maine Venture Fund
(207) 305-0006
terri@maineventurefund.com
