Your Questions Answered
Our Investment Criteria (7)
Which investment opportunities will you consider?
We invest in private, U.S.-headquartered companies across all industries and investment stages, from seed to late-stage. There must be at least one other venture capital firm also making their first investment into the company.
Which industries do you invest in?
We invest in nearly every sector, including aerospace, biopharma, consumer products and services, digital health, electronics and hardware, energy, fintech, healthcare services, industrial goods, medical devices, proptech, software, and tech-enabled business services. The only industries we can’t consider are tobacco, cannabis, firearms, real property holding companies, and oil and gas companies.
At what stages do you invest?
All stages, from seed to late stage. Our only requirement is that at least one other venture capital firm is also making their first investment into the company. Many of our initial investments have been in Seed and Series A rounds, but we’ve made initial investments at later stages, including in growth equity and crossover rounds.
Which geographies do you invest in?
We only invest in U.S.-headquartered companies. They can be anywhere in the U.S.
What's the best time for a company to engage with you?
If you’re raising a round of funding in which you expect an outside lead VC, we want to hear from you. Please contact us by email and we look forward to connecting.
What are some scenarios where you might be a particularly good fit as an investor?
We like to think we’re always a great choice when you’re looking to fill out a VC-led round! But here are a few common scenarios:
- You need to close quickly
- You can benefit from our expertise in data science, go-to-market strategies or introductions to our portfolio and network
- There’s only a small piece of the syndicate still available, so many other VC firms wouldn’t be interested due to ownership targets
- The round is not yet fully subscribed and additional capital from an institutional investor would be of value
- You’ve agreed to the key deal terms with a lead and do not want to engage in a new negotiation with another new investor
- You don’t want another investor calling key customers, repeating due diligence or distracting you from other priorities
- Alternate investors aren’t a good fit (for example, they require a board seat or other special terms)
Which VC firms do you co-invest with?
We’ve co-invested with over 250 different VC firms, including the majority of active institutional venture firms in the U.S. We can consider investments alongside any other VC firm as long as they are institutional, purely financially motivated (e.g. not a venture arm of a corporation), and have made at least a dozen or so investments in recent years in U.S.-based venture-funded companies. Please note, we have invested alongside many great corporate investors but always when there was at least one purely financially motivated investor also investing for the first time in the company.
Our Decision-making Process (8)
What’s the motivation for your unique model?
It’s pretty simple: this is the way we wanted to fill out syndicates when we were lead investors and founders. We know how time consuming and distracting fundraising can be, even after a lead is found, and want to enable you to spend more of your time finding your next customer or otherwise furthering your business. Rather than repeating due diligence, we also want to be able to focus our efforts on being helpful to you. We decided to create the most rapid, reliable, and helpful co-investor in the industry.
What diligence items do you need to make investment decisions?
We try to keep this as simple as possible. We’ll want to see your:
- Investor presentation
- Term sheet for the current financing round
- Capitalization table, including a pro forma cap table for the upcoming round
- Historical annual or quarterly financials
- Legal documents for this financing round (or the prior round if these haven’t been drafted yet)
- Don’t create documents specifically for us if they don’t already exist. Just let us know what isn’t available, and we’ll propose a workaround.
What is your process for making investment decisions?
We keep our process as simple as possible. There are six steps:
- Review documents. We request a handful of off-the-shelf documents to evaluate your company. We’ll let you know if we need any extra information.
- Run analytics. We feed this information into our analytics to see if the opportunity is potentially a good fit. If not, we’ll let you know quickly. While we’d love to always say “yes”, we believe a rapid “no” is the next best thing.
- Conduct phone interviews. We normally talk to the CEO and one of your outside investors.
- Make decision and request allocation. Following our partner meeting, we’ll let you know if we’d like to invest and share our desired allocation.
- Complete administrative diligence. Before closing, we’ll review the legal documents and potentially conduct background checks on one or more key members of management, if this hasn’t already been done by other investors. Our background check is based on a public records review and does not involve calls to the company or others. This step is entirely confidential, at our expense, and typically takes just a few days to complete.
- Close. We pride ourselves on often being the first investor who’s ready to close.
How do your analytics work?
Our goal is to make decisions as quickly and objectively as possible. So we’ve built what we believe is the most complete database of U.S. venture capital financings and outcomes in the world, which all feeds into the model created by our world-class data science team. This model considers team, industry sector, company financials, financing terms, syndicate composition, board, and other factors. Please note that our model performs well in both early stage and later stage investments. While we will select some companies that don’t ultimately succeed, and miss some big successes, our process is designed to create a well-diversified and high-performing portfolio.
Where do you get your data from?
We’ve spent years creating one of the world’s most complete databases of venture capital financings, covering nearly all U.S. venture investments over the last 30 years. We track everything from financing details, investors, board members and management experience to industry segments, business stages and exits. The data comes from many sources, including commercially available sources, SEC and public sources, and data our team has scraped from the web. Finally, we have completed knowledge partnerships with more than a dozen of the most active VC firms in the country.
Can you re-evaluate if our circumstances change?
Yes, we value the opportunity to re-evaluate investment decisions when material facts change, such as updates to the syndicate, terms, board members, company financials, and company management. There are many companies in our portfolio that we initially passed on, whether in the same investment round or a previous one.
Will you offer suggestions or introductions to potential lead VCs?
For our portfolio companies, we’re often one of the most active members of a syndicate, offering suggestions and introductions to potential leads. Our companies benefit from our analytical tools and extensive networks, which help us pinpoint partners and firms that could be a good fit.
Do I need to have an introduction to you from someone in your network?
No. Of course, we love to hear recommendations from people in our networks. However, we’ll evaluate each opportunity in the same way regardless of how you come to us. This is one of the benefits of our objective process.
Our Value as Syndicate Member (8)
What is your typical investment size?
We’re highly flexible, investing anywhere from $100,000 up to $4 million in initial investments, and up to $10 million over the life of a company. We normally won’t be the largest new investor in a syndicate.
Do you have minimum ownership requirements?
Do you take board or board observer seats?
No. Our research tells us that too many VCs on a board correlates with poorer outcomes. We’d rather let our founders build the board that suits them—for example, by keeping their board streamlined, or adding a highly targeted independent director to fill a strategic need. While not taking board seats, we pride ourselves on how helpful we are to our portfolio companies.
How do you add value to your portfolio companies beyond capital?
We believe that the most limited and valuable resource for most entrepreneurs is time. A rapid, hassle-free investment process frees up your time, so you can focus on your business.
Our companies point to many other ways we add value:
- Fundraising. We use our proprietary VC Matching Tool to find great lead investors and syndicate members for our companies. We also have regular deal flow calls with over 100 of the top VC firms, which enable us to introduce our companies to high-quality leads.
- Predictive analytics. Better data science and predictive analytics can help almost every business—and we believe we have the leading data science team in the industry. Anu and his team advise our companies on how to use data science to create a broad range of competitive advantages.
- Go-to-market. Both of our founders have helped lead venture-funded companies through successful product launches. And Wesley Barrow has formidable experience in startup software sales—he was SVP of New Business at Yext, the top sales rep at Buddy Media, and the founder of Nomi. We bring all of these skills together to help advise our companies on how to optimize their go-to-market strategies.
- Portfolio introductions. Our portfolio comprises over 185 active companies and counting. Many are leaders in their fields. It’s one of the largest and most diverse portfolios in our industry, which means we have plenty of great customers and business partners to introduce new companies to.
- Data. With the industry’s leading database of venture-funded companies, teams and financings, we help our companies find investors, partners, acquirers, board members and team members. We also use this data to benchmark their progress and financing terms.
Can you help my company identify potential hires for key positions?
Of course. We have a job board that typically has 500-1000 open positions in our portfolio companies. If you’re looking for a person with specific characteristics within a venture-funded company, we can also often identify specific candidates from our database.
Do you offer group buying discounts for your portfolio companies?
Yes, our large portfolio offers us the unique ability to negotiate group buying opportunities for our companies. While specific opportunities change over time, some examples we have offered include discounts to TriNet, WeWork, AWS, Google Cloud, Brex, and Embroker.
Do you participate in follow-on rounds?
We reserve significant capital for future rounds in our portfolio companies. Our priority is to invest in outside VC-led rounds that fit our investment criteria as described above. For follow-on rounds in our portfolio companies, as with our initial investments, we make a rapid decision with minimal distraction. We also assist our companies, if requested, by making introductions to potential lead VCs and other syndicate members.
What information do you require as an investor?
We value our portfolio quarterly for our investors (LPs), and require standard information rights to do so. We don’t require access to proprietary company IP or other sensitive information.
Our Funds (2)
How large is Correlation’s latest fund and how much money does the firm have under management?
We currently have over $360 million in assets under management and are actively investing out of Correlation II, a $200 million fund.
Who are the investors in your funds?
We are proudly backed by leading institutional investors, including university endowments, foundations, pensions, and high net worth family offices.
Where can I read more about your research and insights?
Check out all of our published industry research here!