CONSILIENCE VENTURES RESOURCES & NEWSROOMS
Thoughts and opinions on industry topics and company updates.
CV is membership platform for tech start-ups/early stage entities, experts and investors.
Start-ups can swap a percentage of their equity for tokens issued by CV (known as CVDS), which they can then spend on expert services provided by other members of the platform.
Experts are more willing to work for ‘sweat equity’, as CVDS gives them exposure to the entire CV start-up portfolio, rather than just equity in the start-up they work for. Therefore, working for CVDS is less risky. Experts can sell their CVDS within the platform, so they do not have to rely on the relevant start-up having an ‘exit’ event (IPO/trade sale etc.).
Investors can buy CVDS from start-ups (who may have excess CVDS not yet spent with experts) or from experts themselves. In the early stages, investor members can also acquire CVDS from the UK operating company (PK2M Limited, FCA authorised) which is itself a start-up on the platform. The company has swapped 10% of its equity for CVDS and acquired additional CVDS in return for services provided to CV (development of the blockchain and other infrastructure, marketing of the platform etc.).
IMPORTANT: Consilience Ventures is NOT a for-profit BUSINESS; its ONLY GOAL is to generate high returns for members and CVDS holders.
CV has invested in 4 start-ups as of June 2020, including the parent company PK2M Ltd. This means that all CVDS holders have a financial interest in the company behind Consilience Ventures.
In the start-up world, timing and time-to-market separates the winners from the losers. Start-up founders spend more time raising capital than growing their businesses – and they cannot focus. Additionally, every actor (start-ups, investors, service providers) in the start-up economy has a different, incompatible agenda. The CV model resolves these issues.
Start-ups benefit from a curated network of experts with a vested interest in their long-term success. It’s easier and more efficient to pay with CVDS than raising capital. In the past, start-up CEOs were focused on raising capital before accessing talent and expertise. Today, CV helps them to focus on growing their business and winning market share.
Experts work for CVDS, which appreciates with the performance of the portfolio, providing significant upside if the companies perform, with very little downside risk. CVDS is the ultimate response to address the lack of liquidity in the private market. Experts benefit from larger upsides and a bigger return on time invested. Plus, they can forget about late payments and running after their money.
Investors can leverage a network of curated experts to select and accelerate companies for free. They can sell CVDS without distracting the portfolio companies and without expensive legal fees. If the investor prefers to be sector specific, he/she can invest directly in companies whenever they wish.
The premise of the CV model is to enable angels/investors to:
- Invest in more high-growth companies faster, at lower risk and cost
- Monetize your time when adding value to CV in areas such as:
- participating in start-up DD (CVDS from above)
- working for the portfolio companies (CVDS from the companies)
- Benefit from a larger pool of experts to work with your portfolio companies
The small changes we’re introducing in the CV model will lead to big changes in the VC world:
• Equality – Investors and Experts taking an equal footing in terms of the return on their investment
• Enhanced productivity – with Start-ups spending less time on fundraising and finding the right people
• Efficiency – prioritising expertise over capital increases focus on doing the right things
• Better decision-making – collective intelligence rather than a committee of elites
• Better monitoring, measurement and responsiveness – via Sprint Financing
When you combine these advantages and weigh them up against the old model, you can see the difference.
A start-up can become part of the CV portfolio through a staged process. Currently, CV members can recommend start-ups, or start-up can reach out to CV. Ideally, the start-up will send some materials outlining the nature of the business.
At that point, one of the PK2M team will examine the materials and decide whether to proceed. If we decide to move forward, the PK2M team member will schedule a meeting with the start-up to introduce CV and explain the way we work, and our expertise-led investment model.
If the start-up chooses to proceed, they must then complete a long-form application. At the same time, CV forms a Review Committee, and begins to review initial material. Once it receives the long-form application, the Review Committee completes a Start-up Fit Assessment and they vote on whether to move forward with the start-up. During this process, it may schedule a meeting with the start-up.
If a start-up passes the Fit Assessment, there will be further meetings, led by members of the Review Committee, to understand more about the start-up, their current circumstances, plans, other investors, valuation etc. After this, there will be a second vote in the Review Committee on whether to proceed to investment. If the result is positive, CV will share term sheet details with the start-up, and the deal progresses from there. Shares are transferred to CV in exchange of the equivalent value in CVDS.
Start-ups meet the network of experts through the DD process and can stop the process at any time if they don’t feel that the quality of the network is high enough.
CV can also share an anonymised Expert directory, which can be searched by sector and expertise. However, CV’s network is constantly growing as members refer new Experts to fill the gaps. It keeps the quality high, covering all the skills start-ups and scale-ups need.
Start-ups are all different and CV respects that by looking at each start-up individually, aiming to maximize impact and optimise return on investment.
ALL INVESTMENTS ARE MADE IN CVDS and CVDS CAN BUY EXPERTISE OR CAPITAL.
100% of CV investment is done in CVDS, and to date, the make-up has been around 70% capital and 30% expertise. CV is uniquely positioned to provide expertise at NO CASH cost to the start-ups. As we grow, we expect to invest expertise only and co-invest alongside VCs/Angels who will provide the cash start-ups need.
Some CV members who are qualified as accredited investors and CVDS holders will be entitled to invest directly in CV-backed companies. This is another source of capital that a start-up can benefit from.
The decision on the size of investment and the expertise/capital is always made based on the following criteria:
• Review Committee (RC) agrees to invest expertise/capital.
• If capital is required, the capital should be pre-agreed with CV investors and/or any potential investor who’s not yet a CV member. If the investor decides to invest indirectly by buying CVDS from the start-up directly, the CVDS purchase agreement should be signed with the investor before signing the term sheet with the start-up.
The investment range is £100k to £500k, or more if there are investors buying CVDS from the start-up directly and/or investing directly into the start-up.
Sprint Financing is CV’s unique model of financing. It works with founders and teams to identify their focus areas (key milestones), enabling start-ups to access finance in an ongoing, staged manner, based on the immediate business goals and results achieved.
We are developing a ticket system for start-ups to access Experts. Until this is ready, CV will assign experts manually.
The start-up will detail the work they need on their ticket:
• Working conditions
The objective will match a deliverable defined in their Sprint Roadmap. Once completed, tickets are matched to Experts with the appropriate skillset, who can bid on the ticket with a proposal.
Typically, Experts and Start-ups will meet to assess fit and refine plans during this process. Ticket compensation in CVDS is held in escrow during the ticket delivery process, guaranteeing that compensation to the Expert will always be available on successful delivery.
Expert rates vary depending on experience, sector, skillset and type of engagement. An Expert must state his/her rate during the ticket bidding process.
Tickets have deliverables and milestones built in – at these times, the start-up and Expert check in with members of the Start-up’s Review Committee to assess progress, and raise any issues. The will avoid surprises at the end of the ticket.
Secondly, start-ups may include “Insurance” on their ticket. For a cost of 10% of the ticket cost, the start-up will be assigned an “Insurer” who will work with it every step of the way to provide Quality Assurance.
• Making sure the ticket is defined well
• Providing feedback on the initial selection of the Expert
• Giving feedback during milestones
• Undertaking a thorough quality assurance of the final deliverable
If, at any of these points, an issue occurs, there is a defined Dispute Resolution process to work through. We also highly recommend that Start-ups and Experts use contracts that include the requirement to resolve any disputes through mediation.
Yes – start-ups are free to spend their capital in any way they wish. They are, however, following a plan (that can change) to spend their CVDS. Using Sprint Financing and the ticket system, the start-up is always in control of WHO they work with in the network.
For example, if the start-up received 10,000 CVDS (£100,000) to execute a marketing campaign for 12 months with the goal to acquire 10,000 leads, they must spend these CVDS in marketing, but are COMPLETELY free to pick which expert to work with.
No – CV values start-ups like a traditional fund or investor. We follow the same terms as lead investors. However, we run our own start-up valuation tool to validate the view of the lead investor.
As we develop the CV platform, our valuation method will become more dynamic and more data-driven. A dynamic start-up valuation will enable members to understand the potential value of start-ups between rounds.
The start-up Founder will refer to the CV partner appointed at the time of exit. The CV Partner will then trigger a meeting with the CV members and the Founder to discuss the opportunity to exit or stay, when possible.
At exit, 100% of the proceeds will be distributed to ALL CVDS holders at the proportion of their holding – CV DOES NOT TAKE A FEE. For example, if Experts own 0.01% of all CVDS when the start-up gets acquired, these Experts will receive 0.01% of the proceeds generated by the exit.
Experts and start-up connect via the Ticket System, which matches the Expert’s skills to the start-up’s requirements.
There are other opportunities to interact as well – on our community app, MatterMost, Start-ups can pose questions to Experts. We also stage events, based on relevant themes, problems or topics.
MatterMost is our main communication tool. It is more advanced than Slack. On MatterMost, members can make collective decisions such as reviewing a deal before starting a Start-up Review Committee. Members can also use this platform to simply talk about industry trends and things that you cannot discuss on social media.
The CV platform will capture significant data that current insights providers like Crunchbase, Pitchbook, Beauhurst and others do not have access to. These insights providers only capture static, survey-based data. This makes their data irrelevant very quickly, and added with the information asymmetry, it can often be misleading or simply not up-to-date.
CV platform is an entrepreneurial ecosystem that captures real-time behavioural data through the ticket system and Sprint Financing. Combining such insights with other financial information automatically pulled from accounting software puts CV in a unique position to see what works and what doesn’t much quicker than humans can see. Putting these insights at the disposal of our founders should help them make better decisions.
Unlike traditional funds, the CV model is 100% based on the success of the portfolio companies. It is in our interest to bring everything we can beyond just money. We’d like to believe that we provide real smart money and we have the proof points to validate our hypothesis. Whatever you need, we will have an Expert that can perform for you.
We have excellent working relationships with Microsoft, IBM, Google and AWS. We can help you understand when is the right time to talk to them. We can also help you with the stories they like to hear, so you don’t waste your time.
We can only take actions if we are aware of the problems. The more transparent entrepreneurs are about their challenges, the easier it is to take action. It’s the difference between writing a check and attending every board meeting and working with companies through their most challenging times.
All our experts have been referred by industry peers. We have a thorough screening process that is twofold:
• Can they work with start-ups?
• Do their values align with CV.
CV is a growing network. We are creating a unique network effect to ensure we can find the best Experts, but we can’t be right all the time. If your relationship with your experts goes wrong, we’ll put forward options to solve the problem including:
• refund your CVDS
• find another expert for you at no cost
Again, your success is our success.
Our Start-up Review Committee define the number of CVDS we invest, based on your plan and anything else we discover during the process. The cash/expertise split is only defined at the end of the selection process and always validated by the startup.
Most family offices interested in CV value want to invest in CVDS (cash that goes to startups) and invest directly. We expect some of these investors to invest directly in our portfolio companies, since they are building an “industry-specific” portfolio – e.g. MedTech, FinTech, SpaceTech. They will have strong incentives to do so, such as no fee, and the ability to invest in less risky businesses, since they are supported by strong domains and industry experts.