Investment Criteria

NewSpring Ventures aims to invest in companies with proven management teams, significant growth potential, a clear value proposition, and a strategic competitive advantage.

When evaluating companies, the NewSpring team focuses on such differentiators as intellectual property, market dynamics, and product revenue streams, searching for leading companies in industry sectors that can exceed $500 million.

The team also prefers to invest in growth- and expansion-stage companies that are expected to become emerging market leaders. These companies are past the stage of product development and early commercialization, typically with $5 million to $50 million in revenue and are at or near cash-flow breakeven. Their managers may be pursuing growth financing, a recapitalization, an acquisition, a spin-out, or a management buy out.

NewSpring looks for entrepreneurial managers who seek a “working” partner from an investor.

The NewSpring investment team evaluates companies for investment based on key factors pertaining to the perspective portfolio company’s market, management and business model. These factors include:

Market:

• An addressable market of at least $500 million.
• A market with a growth rate that exceeds the U.S. GDP.
• A market and operating space that the NSV partners know and understand.
• A market with a low concentration ratio of businesses operating in the space.
• An identifiable exit strategy for the company in that market.

Management:

• A CEO and management team with strong industry knowledge and prior experience: 1) operating in the industry, 2) addressing the target market, and 3) running a successful business together.
• A team whose financial interests are aligned with those of investors.
• A team whose commitment shows “skin in the game.”

Model:

• A business model that is capital efficient.
• A business model based on recurring revenue, high contribution margins, a proven product or service, a scalable platform, and a sustainable competitive advantage.
• A business model that addresses Porter’s five forces: rivalry, threat of substitutes, buyer power, supplier power, barriers to entry.

Investment Amount:

NewSpring Ventures invests $4 million to $10 million of equity capital, in round sizes up to $25 million, to help management teams grow operations, increase marketing and sales efforts, continue product innovations, and finance strategic mergers and acquisitions. The NewSpring team prefers to invest in a syndicate of like-minded institutional investors and will lead, co-lead, or co-invest in an investment round.