What Makes Early Stage Companies Attractive Investments
Why the Early Stage?
HarloKyn seeks to invest $25,000 to $150,000 in companies whose technology, products, or services help enhance our everyday living - home life, work life or school life. While industry terminology and interpretations of stages varies, we typically like to invest after “friends and family” and before an institutional round. We seek to support founders and their companies not only with capital, but also more tactically with our networks and experience as informal (or formal) advisors and / or mentors.
We like the early stages of a company because we have the opportunity to learn directly from the founders what need they are addressing, why they believe they are different and how they will approach the market. We have a “ground floor” or “front row” view on the experience, skills, talent and resourcefulness of the founders and the strength of the company’s business plan.
We believe that any business of any size in any industry- from ExxonMobil to Walmart or to the next ride-sharing app - faces very similar strategic questions. While the scale and magnitudes often vary, the questions about customer acquisition, growth financing, financial reporting, human resource management are often shared challenges. We are optimistic that our experiences and historical good and bad decisions can offer insight as early-stage companies and their founders attempt to address these and other questions.
Our Vague and Somewhat Scientifically-Inspired Criteria
Based Here in Texas or in Surrounding States.
Similar to our Advisory business, we support companies based here in Texas or surrounding states. We believe that North Texas has strong economic diversity with an equally strong intellectual capital base - smart, motivated people willing to take risks with their great ideas.
Founder, Friends and Family Support (“FFF”).
We prefer existing “pre-seed” companies that have a material level of capital support from the founders. This typically includes “friends and family” and allows the entrepreneur(s) to validate a “minimum viable product” before we consider our own commitment.
In our experience, we find that significant FFF commitments help the entrepreneur(s) stay accountable on both a personal and professional level. While there is probably documented research about this phenomenon, we believe that having to answer to grandma, grandpa, mom and dad et al over dinner or Thanksgiving potentially adds another layer of accountability.
More than One Co-Founder.
Two+ co-founders provide a level of resources, teamwork and compatibility to the company that contribute directly to the potential viability and sustainability of a company and its success. This camaraderie helps these founding teams grow and learn from each other and support each other during the good times and bad.
Defined Path to Success.
Not necessarily last, we seek a defined path to generate at least $15,000 of monthly recurring revenue (“MRR”) within 9-12 months and $300,000 of annual-recurring-revenue by month 18. While profitability can be a good indicator of success, revenue and customer growth demonstrate that the market also believes in the founders’ vision, product or service.
