WHAT MAKES THE SYNDICATION FUND DIFFERENT?
Syndication Fund was created to give NCV investors access to high-quality opportunities from across the country. The fund is able to invest in a more geographically dispersed set of startups than previous NCV funds as it does not utilize Ohio Third Frontier funding tied to in-State investments.
The fund primarily sources deal flow from a subset of NCV’s most trusted co-investors. These partners invite NCV to participate in high-quality, on-thesis deals because of our long-standing relationships and a demonstrated ability to activate our “on-demand” member network to facilitate meaningful customer introductions, and leverage domain and industry expertise.
NCV will continue to make seed-stage investments in Ohio-based companies through its Seed IV fund which has capacity for ~10 more investments.
WHY IS THIS THE RIGHT TIME TO LAUNCH SYNDICATION FUND?
Seed Fund III and Seed Fund IV successfully demonstrated that NCV could attract and successfully accelerate B2B software companies at scale. Companies in these portfolios have achieved revenue and fundraising milestones meaningfully faster than those of earlier funds. In Seed IV, the fund had limited “non-matched” capital outside the capital associated with the Ohio Third Frontier Award. NCV used that capital to test our ability to attract and engage with targeted out-of-state companies through our trusted partner network. The quality and quantity of deals exceeded our expectations, making it clear that this was the right time to move forward with Syndication Fund.
WHAT RETURNS ARE THE FUND TARGETING AND HOW HAVE PAST FUNDS PERFORMED?
Syndication Fund is targeting a cash-on-cash return of greater than 3x, consistent with the in-process performance of Seed III and Seed IV. The chart below shows the current exits from NCV’s Seed Funds.
Many other Seed Fund investments that have not yet exited, have achieved attractive increases in valuation (unrealized gains). Several examples are listed below. We anticipate additional gains for these companies as they continue to grow and raise capital at increased valuations.
Our most recent funds have been increasingly successful due to our expanded supportive network, a narrowed scope, and increased deal flow efforts. As such, the investment thesis for Syndication Fund will be similar to that of Seed Funds III and IV - early-stage, B2B, SaaS ventures that target addressable industries in which NCV’s membership and corporate partners can drive value.
We have linked high-level overviews of portfolio performance for Seed Fund III and Seed Fund IV for further review.
WHAT IS THE INVESTMENT DECISION MAKING PROCESS FOR SYNDICATION FUND?
In order to be a strong, responsive partner to our national co-investors, we have streamlined the investment process for Syndication Fund.
This will include consistent engagement with NCV’s vast co-investor network, with a focus on monthly deal sharing with our top 10 partners. NCV will meet with a segment of these early-stage ventures and conduct preliminary cursory due diligence.
On-thesis, screened opportunities with potential for investment will be further screened by a “Due Diligence Team.” Due Diligence Teams are composed of members of the NCV Management Team, as well as select member investors possessing relevant industry and functional expertise, external subject matter experts or hired consultants, at the discretion of the Management Team. Recommendations from these Due Diligence Teams will influence final investment decisions.
Investment decisions, contract negotiations, and investment transaction terms may be determined by the NCV Management Team, in its sole discretion, in the best interests of the Fund. This investment decision-making approach is similar to that of the North Coast Ventures Acceleration Funds.
Additional details on the governance of the Fund can be found in the Partnership Agreement and the Term Sheet included in the Subscription Book.
HAVE ANY FUND INVESTMENTS BEEN MADE YET?
In April of 2022, Syndication Fund made a seed-stage investment in Because Intelligence, a Florida-based automation platform that helps eCommerce stores create unique, dynamic product page experiences that don’t require hours of development time. Read more here.
In July of 2022, NCV made a seed-stage investment in Itiliti Health, a Minnesota-based healthcare technology solutions company that helps health insurance payers streamline their prior authorization (PA) processes. Read more here.
WHAT ARE FUND ECONOMICS AND FEES?
The Fund is a “straight 2/20,” meaning there is a 2% annual management fee on committed capital for the 10-year life, and a 20% carried interest after 100% of investor capital is returned. If the fund life is extended by a majority vote of investors, no additional fee or carried interest is incurred.
HOW DO I MOVE FORWARD WITH AN INVESTMENT IN SYNDICATION FUND?
After you have reviewed the Subscription Book prepared by Jones Day, investors can begin the process of electronically signing the execution pages on our investor onboarding platform, Nova. You may access the platform via this link.
Once on the Nova platform, investors will input their contact, banking, and tax information. Investors have the option to share the documents with an advisor or other representative for completion.
If you have any questions, please do not hesitate to reach out to North Coast Ventures CFO, Ann Kirschner (ann.kirschner@northcoast.vc) or support@novahq.com.
The final step to secure an investment in Syndication Fund is to wire your capital commitment. Additional details will be shared via email once the executed subscription documents are countersigned by Managing Director, Todd Federman.
WHEN WILL I FUND MY INVESTMENT?
An Initial Capital Call will be made at the Initial Closing. For investors at the $50K level, 50% of your capital commitment should be wired to North Coast Ventures at closing. The remaining 50% will be called in 12 months.
For investors at the $100K level or above, 40% of your capital commitment should be wired to North Coast Ventures at closing with 30% on the 12-month anniversary of the Initial Capital Call and 30% on the 24-month anniversary of the Initial Capital Call.
If you commit to the Fund after the Initial Capital Call, capital will be called from you upon commitment with the balance called 12 months (and 24 months for $100K+ level) from the Initial Close date as if you came in on the Initial Close.
HOW DO INVESTORS ACCESS INFORMATION ABOUT THEIR PORTFOLIOS?
North Coast Ventures member investors will receive access to the Fund’s investor portal and reporting platform. Within the portal, member investors are able to see relevant announcements, access documents such as K-1’s, view capital commitment status, and download reports including quarterly performance reports.
The portal is updated quarterly by our Fund Administrator after each period’s end. For example, any contributions/distributions made in Q1 2022 won’t be reflected in the member account on the portal until the end of May 2022.
