SIFP Seattle 2011 has raised an investment pool of $100,000 to invest in winners from amongst finalists selected at the October 3, 2011 event.
The investment will be made with friendly, but non-negotiable standardized investment terms designed for early-stage social businesses who are expecting to raise $500,000 or more equity capital in the next 12 months.
And to be even more transparent, here is the actual convertible note template investors will be using for winners.
The investment process will work like this:
- Winner(s) selected at October 3, 2011 event by investors
- Investors will perform due diligence (target 2 weeks)
- Convertible note gets executed
- Money gets wired to your bank account
Q: How many and what size of investments will you make?
Investors will make one or two investments depending on the quality and potential of the finalists. The investment pool is currently at $75,000 and may go higher. The minimum investment size will be $25,000. There may also be co-investment requests from investors outside of this pool.
Q: Can for-profit companies win grant prizes?
Yes. All finalists (non-profit and for-profit) will compete for $10,000 of grant prizes selected by the audience.
Q: If I don’t want to receive an equity investment in my company, should I still apply for the SIFP program?
You are welcome to apply as there are many additional benefits to the SIFP program than the for-profit investment prizes including training and mentoring to help you improve your strategic thinking, plan and fundraising capacity as well as exposure to additional investors.
Q: Is there an opportunity for for-profit companies to talk with investors?
Yes. All semi-finalists will be provided a table at the Oct 3rd public event where they will have an opportunity to interact with investors participating in the event. We are expecting to have a considerable number of early-stage angel investors at this event.
Q: How many quarter-finalists, semi-finalists, and finalists are there in the for-profit track?
There will be approximately 12 quarter-finalists, 6 semi-finalists and 3 finalists for the for-profit track.
Q: Which for-profit companies get to present at the Oct 3rd public event?
The finalists get to present their “fast pitch” to the whole audience. The semi-finalists (including finalists) will be provided a table to present and interact with event participants (including many investors) at certain times during the event.
Q: Who are the judges for the for-profit track?
The investors providing capital for the for-profit track winners.
Q: If a winner does not pass investor due diligence or for some reasons declines the SIFP investment, what happens to the monies?
The investors will decide whether to provide the allocated funds either to another already recognized winner (assuming there is one) or to a runner-up business.
Q: Why are investment terms not negotiable?
Because we want to keep the investment transaction costs low for both the investors and the company. We have entrepreneur-friendly simple standardized investment terms, published here.
Q: How did you come up with these investment terms?
We have worked with experienced angel investors, social entrepreneurs and startup attorneys in order to create a set of terms which are fair to both the investors and companies. The goal is to provide highly flexible capital to the company without having to go through the complexity and cost of a valuation and other investment terms and associated higher legal costs for closing the investment transaction.
Q: Are the investment terms negotiable in any way?
Q: What does the $500,000 amount mean on the term sheet?
Once you’ve raised a total of $500,000, the note converts into equity factoring in interest earned to date and discount provided for extra risk taken by note holder.
Q: What happens if an investee company doesn’t raise at least $500,000 before the note matures in 24 months?
The note will automatically convert into common stock according to the formula stated in the note.
Q: Are investors requiring a board seat?
Q: How involved do SIFP investors expect to be with investee companies?
There is no specific commitment from investors to be involved in investee companies although, like many angel investors, the investors will be eager for the success of the company.