For Venture Capitalists
As venture capitalists during the past two decades, Correlation Ventures’ partners came to the realization that the ideal co-investor often didn’t exist. Once our companies had one or two venture capitalists on their boards, we often wanted capital, not another board member or decision-maker in the mix. We sought an experienced and reliable co-investor who could make rapid investment decisions, provide minimal disruptions, and scale their investment size to the needs of the company. We created Correlation Ventures to fill this unmet need and provide equity leverage for lead venture investors.
Venture-funded companies often take many months to close a round of financing. Correlation Ventures typically makes investment decisions in two weeks or less, with minimal distractions to you and your management teams. We don’t repeat the due diligence you’ve already performed; in fact, we simply need a handful of readily available documents for our review. Your management teams can start executing on their plan sooner and you have more time to focus on creating value across your portfolio.
Reduce Financial Risk
Too many venture financings don’t raise as much capital as was targeted. And too many startups run out of capital before they reach key milestones. Correlation Ventures offers the ideal source of co-investment capital to fill out a financing round. Increase the size of the round or reduce your commitment and increase your reserves for future rounds. That’s what we mean by “equity leverage.”
Avoid Over-Capitalizing Your Companies
Research shows that over-capitalized companies, on average, generate lower outcomes for investors. Correlation Ventures is highly flexible on our investment sizes, ranging from $250,000 to $4 million. We have no ownership percentage requirements, enabling your companies to raise just the amount they need.
Improve Corporate Governance
Research also indicates that too many venture capitalists on a company’s board can reduce the probability of a successful outcome. We believe this is because too many conflicting voices and interests dilute the impact of a small number of experienced, value-adding board members. Correlation Ventures doesn’t take board seats, affording you the flexibility to add an independent director to fill a strategic need or to avoid another decision-maker altogether. Either way, we help your company obtain the corporate governance structure it needs to succeed.
Increase Predictability in Future Financings
When an investor unexpectedly elects not to participate in a subsequent round—or they add substantial process to the financing—it limits your company’s prospects. From the start, Correlation Ventures shares what our reserves for future rounds will be. We then typically follow pro rata into future financings until we reach our cap. This way, you and your management team can more accurately plan and close future financings.
When Is Correlation Ventures Right For You?
There are many scenarios in which Correlation Ventures could be an ideal co-investor. Some examples include financings where:
- The round is not yet fully subscribed and where additional capital from another venture capital firm would be of value
- You would prefer to reduce your commitment in this round and increase your reserves for future rounds, but don’t want to reduce the round size
- Speed in closing is critical
- You don’t want other prospective investors calling key customers, repeating due diligence or distracting management
- Just a small piece of the syndicate remains available—too small for typical co-investors to be interested
- Alternate investors are suboptimal, such as those who require board seats or other special terms