Investing in women-led startups

X Squared Angels Group invests in women-led startups. The group welcomes female and male accredited investors as members.

If your company has at least one woman in a C-level position, it may be a good candidate for an X Squared Angels investment.

Goals of X Squared Angels

The mission of X Squared Angels is to demonstrate and to promote the financial effectiveness of gender diverse management business teams through investment in their companies.

  • Generate above average returns when compared with other angel groups
  • Create jobs as well as founders’ wealth
  • Engage more accredited angel investors
  • Increase deal flow within the mid-west
  • Provide deal syndication opportunities among angel groups
  • Promote shared learning from other angel groups

Investment Strategy

X Squared Angels invests primarily in high-potential early-stage companies in IT, software, bioscience, advanced materials, medical devices, and most other markets located in Ohio as well as the rest of North America:

  • Companies with at least one woman at the C-level who owns significant equity
  • Products with high barriers to entry
  • Market size >$500M
  • Exit strategy with substantial financial payback for founders
  • 3 to 5 year target exit with highest ROI possible for investors

Expanded Investment Strategy

Typically an X Squared Angels portfolio company will have a woman founder and CEO, but these criteria are also acceptable:

  • The woman must have a C-level title. We care about whether she has power and influence within the organization.
    • She must own significant equity and “significant equity” depends upon the circumstances. For example, a founder seeking a Series A with less than 50% equity might not be considered reasonable while a CEO who has been hired in after a Series A round who owns 10% equity might be sufficient.
    • High potential technology companies in IT, software, biological sciences, medical devices, or advanced materials will possess a clearly identified and unique differentiating factor that positions the product/solution as a potential high margin market leader. These companies will gain traction at X Squared Angels as long as they are capital efficient and have a plausible strategy to exit within approximately 5 years from the date of our initial investment.
    • Consumer Goods companies normally need to have reached revenues >$500,000 and gross margins >40%

Portfolio Company Attributes

These attributes will describe the X Squared Angels portfolio organizations:

  • Scalable product and business model
  • Product is in beta (versus alpha) stage of development and has been developed with input from clients or potential clients
  • Company has at least two paying clients
  • Management team is well rounded and experienced in their market sector
  • A clear exit strategy is in place for an exit within 3-5 years
  • Company is a C corporation or must be willing to convert to a C corporation, when X Squared Angels initiates and syndicates the deal
  • Pre-money valuation is typically less than $5M, particularly if it is a pre-revenue company

An exception to these attributes may be made, especially with technology companies, where the group may invest in seed stage pre-revenue companies.

X Squared Angels will not fund real estate projects, television or radio programs, films, theater or art productions or companies represented by brokers of any kind.

Funding Process

X  Squared Angels began operation in early 2013. As of the third quarter, the group has screened 42 companies from all over the U.S. and Canada. Twelve companies (seven of which are Ohio-based) have presented to the membership. The group has made one equity investment, 1 bridge loan, and one company is currently in the due diligence process.

  • The group’s deal flow committee will review your application and may invite you to an initial screening.
  • Following the screening, you may be invited to present your company to the full membership.
  • If members are interested in investing, the group will begin the due diligence process to further the opportunity.
  • Following due diligence, individual group members will decide whether or not to invest in the venture.

X Squared Angels will have office hours (at Rev1) for entrepreneurs on Wednesdays, 9 a.m. to 3 p.m. by appointment.

 

To schedule an appointment, request an application, or for additional information about X Squared Angels membership or the funding process, please contact Pat Carpenter or call Rev1 at (614) 487-3700.