The Pre-Revenue Early Stage Investment (“PRESI”) sub-asset class is the most important in the world. However, a massive funding gap exists for PRESI. Why? Over 50% of investments in single companies results in capital loss. This fact statistically reduces repeat investment despite evidence this sector provides the highest returns in the market. This paradox reveals an opportunity for a platform approach to this space simultaneously solving the funding gap and providing the greatest opportunity for investor returns, societal advancement and job creation.
- There are thousands of qualified, yet unfunded projects due to the gap between angel maximum investments ($750k) and venture capital minimum investments ($5MM)
- There are thousands of qualified, yet unfunded projects because angel and VC investment criteria require a pre-established management team.
- Invention is at an all time high while the rate of startups are at an all time low.
- Only 2.5% of venture capital is allocated to seed/startups.
In a study of 1,137 start-up exits via angel groups, the Kauffman Foundation determined that the aggregate internal rate of return for these companies was a remarkable 27%. However, no platform has ever existed that made these types of returns available revealing an opportunity to do a “roll-up of startups.” As with any roll-up strategy, economies of scale and unprecedented efficiencies are revealed.
The Incubation Factory invested twenty years and millions of dollars to create a platform which yields a 10x efficiency improvement in the PRESI space. TIF’s platform is the only PRESI venture system purposely designed to maximize investor returns as well as feed the upstream market in a profitable, accountable and transparent fashion. This “feeder system” provides the financial, operational and distribution infrastructure (the “Platform”) for the PRESI space, which traditional venture and angel firms cannot do on their own.