CVX Masterclass: How-to best invest in unlisted growth companies (Online)

HOW-TO BEST INVEST IN UNLISTED GROWTH COMPANIES

​Several of you have started – or would perhaps like to learn? – how to invest in unlisted companies or startups and scale-ups, as we call them in the CVX context, in addition to the typical asset classes such as publicly traded companies, index funds, bonds, and real estate investments.

​ But how is this done most appropriately, in relation to your preferences and risk profile – including how to achieve sufficient risk diversification within this segment?

​ For an informal and inspiring presentation on this topic, we have teamed up with Martin Bjergegaard from the investment fund Strive Ventures.

Recording of the masterclass: Click here
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Materials from the masterclass: Click here

Key points from masterclass:

1. Action Items

Zenia to provide CVX investment criteria template to participants 43:49
Zenia to set up optional follow-up session for participants to develop individual investment theses 01:30:54
CVX to publish masterclass recording on portal later today 01:29:51

2. Investment Criteria and Framework

Strong topline growth of at least 20-50% required; profitability secondary to growth trajectory 34:55
Rule of 40 applies: combined topline growth and profit margin should equal 40% minimum 37:27
Investors must honestly assess whether they can add value beyond initial meetings 39:28
Investment criteria should be documented in one-page format for clarity and reference 42:44

3. Deal Evaluation Process

Develop quick sanity check method to evaluate cases in under 30 minutes 01:01:56
Think about exit strategy before entering investment to avoid long-term illiquid positions 01:02:29
Evaluate 100 cases to identify one investment opportunity; requires active sourcing and networking 58:15
Conduct thorough due diligence for minimum three to five months before investing 01:18:30

4. Exit Strategy Requirements

Align with founders on three to five year exit timeline before investing 01:04:55
Complete management team essential for exit; single founder dependency creates acquisition risk 01:08:29
Minimum 30% annual growth required to attract acquirers; 10% growth insufficient for exit 01:11:22
Strong financial reporting and documented processes necessary to demonstrate company stability 01:12:11
Growth plan for future required; buyers evaluate potential beyond current revenue level 01:13:55

5. Value Creation and Investor Role

Investors must add value beyond capital; passive money alone unlikely to outperform stock market 01:23:02
Create one-page value creation plan with founders outlining specific goals and metrics 01:25:05
Syndicate model allows shared due diligence responsibility among multiple investors 01:19:08
Establish clear roles: lead investor, co-lead, or passive investor with defined responsibilities 01:23:50

6. Portfolio Diversification Strategy

Business angels should target 30-50 company stakes minimum for consistent returns 01:26:40
Combine active investments, syndicate participations, and fund investments for portfolio balance 01:28:38
Spreading investments across multiple companies reduces risk versus concentrating in single winner 01:27:33

7. Founder and Company Governance

Establish veto rights on non-arm’s length transactions like founder salary and family hiring 56:07
Require investor approval for major capital expenditures exceeding 500,000 kroner threshold 01:12:22
Assess founder willingness to accept realistic acquisition offers versus holding out for unrealistic valuations 01:06:40

8. Due Diligence Best Practices

Prioritize deal breakers first in due diligence process rather than sequential document review 01:20:12
Request professional due diligence checklist from CVX or similar provider for comprehensive coverage 01:19:24
Access CVX data room containing founder documents and prior due diligence upon expressing interest 01:21:51
Qualify investment decisions with thorough analysis rather than relying solely on gut feeling 01:21:15

9. Strive Ventures Fund Performance

Strive Ventures Fund 1 launched January 2022; achieved 341% annual turnover increase across portfolio 01:25:56
Portfolio profit increased 5x with first partial exit to major chemical fund completed 01:25:56
Fund targeting 150 million euros with 100 million already committed from investor network 06:13

10. CVX Investment Philosophy

CVX uses four P framework: People, Performance, Philosophy, and 50% revenue commitment threshold 01:30:07
Preferred industries include life science, software-as-service, energy, real estate, and impact/ESG 01:30:40
Investing combines both art and science; process-driven approach increases success probability 01:30:07
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