The Nutrition Capital Network (NCN) Screening Committee uses the following criteria to evaluate potential Presenting Companies from the nutrition, health & wellness, natural and organic product, and green product industries.
Novelty and Unique Position
- A demonstrated point of differentiation
- New company or concept for investors; not ‘shopped around’ too much
- Potential for leadership in a defined subsegment, channel or niche of some size
- Protectability of product or service or technology; defense against copycats
- Intellectual property: trademarks and patents
- Size and growth rate
- Scalability; potential for economies of scale
- Profitability; demonstrated gross margins
- Exit potential: A variety of interested parties
The Management Team
- Pertinent experience of executives: health & wellness, medical, startups, CPG companies, a specific distribution channel and/or marketing & sales
- Demonstrated track record in early stage or returning capital
- Surrounding team: investors, partners, marketing & distribution alliances, legal team
- Star power and charisma; name recognition
- Good branding or brand name, good quality & taste, unique packaging or presentation
- The “WOW” factor; head turning potential
Stages of Investment
The NCN Screening Committee considers companies at the following stages:
Companies that have established revenue, growth and profitability history. Revenues of $20-$100 million or higher and looking for capital for major initiatives, growth, globalization or acquisitions Investments of $10-50 million usually sought.
Second Round or Later Stage:
Companies that have already raised structured capital, with revenues of $5 million or higher and looking for growth capital. Investments of $5-20 million usually sought.
Typically companies beyond proof of concept with revenues of $1-5 million and raising outside or professional capital for the first time. Investments of $2-5 million usually sought.
Companies engaged in proof-of-concept or “pre-revenue”, typically bootstrapped or funded by family and friends and now ready for angel or early-stage venture financing. Revenues typically less than $1 million and seeking investment of $500,000 to $2 million.
For a typical NCN meeting, there may be 2-3 advanced companies, 6-8 in second round, 8-10 in first round and 3-4 startups.
Nutrition Capital Network Screening Process
Presenting Companies are professionally screened by Nutrition Capital Network Principals. NCN Principals and Selection Committee members each have over 15 years of experience in the nutrition industry. Typically 80-100 business plans are reviewed in preparation for an NCN meeting. The top 18-24 applicants are invited to present and are professionally coached prior to the meeting.
- Dataroom Services: Later-stage companies may qualify for NCN’s Dataroom Services packages for key investors that include more detailed company information to accelerate the investment review process.
NCN Investment Scope
Tips for Presenting Companies from Two NCN Investors
- Be concise about what your company does: the elevator speech
- Be honest (in general, and about where you are in terms of your company positioning and evolution and where an investor can hep you get to be)
- Describe in detail your competitive advantage and the barriers to competition (but don’t ‘badmouth’ competition)
- Explain the strengths of your management team in specific terms
- Be sure to explain the points to achieve your “proof of concept,” especially if you’re an early-stage company, and remembering that an investor may have a different scale
- Clearly define how much money you’re looking for and your use of proceeds
- Think about it answering the question “Why would a buyer be excited about my product?; and be concise
- Think from an investor’s perspective
Quantify the market opportunity
- What is the size and growth of the addressable market?
- Define competition – you always have it
Demonstrate that your management team is “backable”
- Team may not be fully built out, but a solid core is critical
- Why is this the right team to exploit the market opportunity?
- Recognize that the ideal team differs based on stage of company
Illustrate that sell-through is in excess of retailer hurdles and is trending upward over time
- Most investors are data-driven, so access to this information is important
- Use this level of detail as a basis for the assumptions with which you build yur forecast
Detail use of proceeds and show that funds will be deployed in high ROI initiatives
- Differentiate between start-up capital and expansion capital (very different risk profiles)
Choose the right partner
- Relevant experience to help you grow your business
- Make sure interests are aligned
- Potential exit strategies should be discussed in advance
Focus on a “fair” valuation
- Getting every last dollar in an early fundraising has little implications to long term value (this goes both ways)
- Beware of “angel valuation trap”