Our investment process is designed to be efficient and transparent. Once a lead investor is identified we strive to work efficiently and effectively with them to promptly finalize terms and close a transaction within their desired timeline, which is generally no more than eight weeks.
On-Going (Before the Investment): Find Potential Investments
We actively seek out the highest potential investment opportunities by working closely with UT System institution commercialization offices, accelerators, incubators, entrepreneurship organizations, co-investors, community and industry partners, alumni and other friends of UT innovators. We dedicate significant efforts towards maintaining visibility across our investable opportunity set and getting ahead of company fundraising cycles. We welcome the opportunity to build a relationship with you even if your company is not actively fundraising.
Stage One: Develop a Pipeline
Understanding our deal flow helps us to be responsive to potential and current portfolio companies’ needs and to stay engaged with our community partner. The UT Horizon Fund team meets weekly to discuss any new investment opportunities that have been identified and to ensure that existing opportunities are progressing along our investment process towards an investment decision. At any given time we are typically involved in due diligence for five to ten companies that are actively fundraising.
Stage Two: Research Qualified Companies
The purpose of the due diligence process is to help us understand the value proposition of making an investment in your company and to allow us to identify the key risks associated with the investment. During this phase of the process UT Horizon Fund analysts lead a detailed research and discovery effort that involves legal counsel, technical specialists and market experts, including the UT Horizon Fund Advisory Council. Wherever possible, we strive to prevent the company from duplicating efforts and by collaborating with co-investors throughout this process.
Intuitively, the things that make your company unique are also what prevent our team from utilizing a “standard” due diligence process; there is no one-size-fits-all solution for identifying the perfect portfolio company. However, the common themes involved with evaluating every investment include understanding (in no particular order):
- the management team’s experience and core competencies
- the backgrounds of the board of directors and advisory board
- the market need for the company’s product/service
- the novelty or competitive advantage of the company’s solution
- the business development and operational strategies
- the company’s capital structure and historical financials
- the company’s intellectual property portfolio
- the milestones the company intends to accomplish with this fundraiser
- the expected future capital needs and anticipated exit strategy
The UT Horizon Fund team wants to help companies succeed in every way possible – we enjoy providing wisdom and guidance to entrepreneurial-minded students and first-time CEOs almost as much as we like investing in companies that are tackling humanity’s greatest challenges. If you have any questions, don’t hesitate to Contact Us! Some non-profit organizations that also provide information and resources to early-stage companies include:
National Venture Capital Association
Texas Venture Capital Association
Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs
Stage Three: Build and Maintain the Portfolio
In this step we become your investment partner. We utilize capital allocation models to better understand a company’s current and expected capital investment requirements and determine the appropriate UT Horizon Fund investment amount that will provide the company with the funding necessary to accomplish measurable milestones. The UT Horizon Fund is a committed, long-term partner to our portfolio companies, and if future fundraisings are expected, we reserve capital to participate in those follow-on rounds.
On-going (After the Investment): Exercise Good Governance
The UT Horizon Fund generally occupies observer roles on portfolio company boards and prefers not to take voting rights. We pride ourselves on our understanding of the term “observer” and endeavor to be a resource to portfolio company boards, but only if called upon. In the past, we have been invited to connect management teams with strategic advisers within our network, provide access to potential co-investors and offer insight and perspective on business development strategies, human resource additions and potential liquidity opportunities. The University of Texas System contains a wealth of talent, resources and know-how and we want to help you maximize the benefit of our partnership by leveraging those strengths.
Questions? Contact Us at any time.
