Our Investment Process
Pace Ventures follows a structured, five-step process to assess seed-stage investments, prioritizing transparency, founder alignment, and deep dives into team dynamics, product viability, and go-to-market strategy, completing decisions within 4-6 weeks. Focused on Health and Greentech, they invest ~$1M per company, typically aiming for 5-10% stakes in high-potential, category-defining start-ups.
Nov 18, 2022
Marius Swart
Starting a successful start-up takes a lot of time, dedication, and hard work. Raising funds can be even more challenging, especially when new to the process. At Pace Ventures, we believe in radical transparency. We want to summarize our approach to making seed investments to give founders a sense of where they stand if we’re fortunate to speak with them.
While not a hard and fast rule, we generally want to meet with founders at least three months before they start to raise their next round. This helps us understand if there is chemistry between parties and provides insight into how well teams execute against previously mentioned inflection points. It also helps us understand where to add value once the transaction has been finalized.
For the most part, we have a diversified portfolio approach, which means we target to invest in around 30 companies over the fund’s life. Given our fund size, our average initial check size is close to $1mm, and with this size check, we want to have between 5 and 10% allocation per investment. Furthermore, we are thesis-driven investors and do a healthy amount of outbound reach to start-ups. We are currently most excited about the following areas:
We supplement our research and deal flow by speaking to founders and other investors in our network. We do not lead deals and believe in the power of reciprocity, so we actively share (with founder permissions) deals with others in our network.
On average, we will evaluate around ten deals per week and invest in 6 or 7 companies per year. Said in another way, we will invest in ~1.4% of all the companies we evaluate annually. More significant funds with larger teams, will evaluate more deals but also only invest in around 1 to 2% of all the deals they see annually.
Once founders are actively raising, a five-step process is initiated, lasting between 4 and 6 weeks from start to finish.
Stage 1: Evaluating the Team
Timeline: 1 Week
The first step is to schedule the first call with at least one, preferably all, of the founders. Although we are a small team, we try our best to have Katharina and me on every first call, but sometimes, given the sheer volume of deals, it might just be one of us. A typical introduction call will last 30 minutes. We spend most of the time learning more about the founders’ motivation for building that particular company and sharing more about ourselves and Pace Ventures.
Following the call and over the next seven days, we will do some additional basic research into the space to understand the level of competitiveness and speak to as many subject matter experts to validate the problem.
Stage 2: Evaluating the Product / Service
Timeline: 1–3 Weeks
If there is internal alignment to move forward, a follow-up call is scheduled with the entire founding team to delve deeper into the product/service (i.e., roadmap, features, learnings to date, insights, etc.).
The typical product/service call will last between 60 to 90 minutes, depending on the stage of the company and the product readiness. The goal of this session is twofold: 1) work through the 2–3 essential parts of the product that is critical to gain commercial traction and 2) test the chemistry between the founders and the Pace team. We look for several things but most importantly: Does the product do what it is intended to do? How easy is it to explain to others? What are the missing features? We also see how founders respond to our feedback. Do the founders get defensive or see it as an opportunity to openly discuss details about what is working and not working?
We prefer to have this call before entering any dataroom to avoid confirmation bias on the call. Following the call, we will internally discuss the parts of the business’s primary product features. We want to understand how the business differentiates its product or service from competitors’ offerings and identify its competitive advantage. Is the advantage sustainable? Why or why not?
It usually is at this point that we like to enter the dataroom and validate what we have learned to date. In parallel, we will speak with others in our network and, with the previous round, lead investors to understand their due diligence and current views on the product. This part takes about 1 to 3 weeks to complete.
After this stage, it should be evident whether, and what type, of support we will be able to provide.
Stage 3: Evaluating the GTM Strategy
Timeline: 1 week
The GTM Meeting is again a ~60 to 90-minute call where founders present the go-to-market strategy. Pitches can take any format, virtual or in person, but our approach to this part of the process is that it is a brainstorming session with founders to assess “How big can this get?”. Following the deep dive into the product, we will come prepared with critical questions and ideas on various components of the GTM strategy.
We need to hear how deeply the founder understands their business model and the profile of the first target customers (“customer personas”). Questions from our end will focus on where to find customers going forward, why they would buy this product, how to retain them, how teams will collect and integrate customer feedback, how they came up with their product pricing, etc. As a Pace portfolio company, we want to be 100% behind your success, so it is important to understand where you will be able to generate future revenues and how we can support you on that journey.
After this meeting, we will once again validate the business’s main competitors and their funding lifecycle, debate internally and agree on whether to present this to our Investment Committee (“IC”) for a final decision. If we have yet to meet the founders in person, we will arrange to do so before presenting to the IC.
Stage 4: Preparing our Investment Memo
Timeline: 1 week
Our standard investment memo covers all the business’s salient parts and summarizes the discussions and meetings we’ve had with teams up until this point. It usually takes us a maximum of one week to complete as, during the preparation, we might have some follow-up questions which arise and require a bit of back and forth with founders.
Stage 5: Present to the Investment Committee
Timeline: 1 week
Our IC comprises a very small number of people, allowing us to move quickly, and we can commit to providing a final answer on whether we will invest within one to two weeks following the GTM call. Therefore, in most instances, we can complete stages 4 and 5 within one week.
As we do not lead deals, we will follow the lead investor’s standard term sheet and commit to closing as soon as possible and prefer to be one of the first investors to wire funds after the deal has been signed.
We would love to meet you if you’re a seed-stage founder building a category-defining start-up in the Health or Greentech space. Please reach out to anyone from the PaceVentures Team.
Starting a successful start-up takes a lot of time, dedication, and hard work. Raising funds can be even more challenging, especially when new to the process. At Pace Ventures, we believe in radical transparency. We want to summarize our approach to making seed investments to give founders a sense of where they stand if we’re fortunate to speak with them.
While not a hard and fast rule, we generally want to meet with founders at least three months before they start to raise their next round. This helps us understand if there is chemistry between parties and provides insight into how well teams execute against previously mentioned inflection points. It also helps us understand where to add value once the transaction has been finalized.
For the most part, we have a diversified portfolio approach, which means we target to invest in around 30 companies over the fund’s life. Given our fund size, our average initial check size is close to $1mm, and with this size check, we want to have between 5 and 10% allocation per investment. Furthermore, we are thesis-driven investors and do a healthy amount of outbound reach to start-ups. We are currently most excited about the following areas:
We supplement our research and deal flow by speaking to founders and other investors in our network. We do not lead deals and believe in the power of reciprocity, so we actively share (with founder permissions) deals with others in our network.
On average, we will evaluate around ten deals per week and invest in 6 or 7 companies per year. Said in another way, we will invest in ~1.4% of all the companies we evaluate annually. More significant funds with larger teams, will evaluate more deals but also only invest in around 1 to 2% of all the deals they see annually.
Once founders are actively raising, a five-step process is initiated, lasting between 4 and 6 weeks from start to finish.
Stage 1: Evaluating the Team
Timeline: 1 Week
The first step is to schedule the first call with at least one, preferably all, of the founders. Although we are a small team, we try our best to have Katharina and me on every first call, but sometimes, given the sheer volume of deals, it might just be one of us. A typical introduction call will last 30 minutes. We spend most of the time learning more about the founders’ motivation for building that particular company and sharing more about ourselves and Pace Ventures.
Following the call and over the next seven days, we will do some additional basic research into the space to understand the level of competitiveness and speak to as many subject matter experts to validate the problem.
Stage 2: Evaluating the Product / Service
Timeline: 1–3 Weeks
If there is internal alignment to move forward, a follow-up call is scheduled with the entire founding team to delve deeper into the product/service (i.e., roadmap, features, learnings to date, insights, etc.).
The typical product/service call will last between 60 to 90 minutes, depending on the stage of the company and the product readiness. The goal of this session is twofold: 1) work through the 2–3 essential parts of the product that is critical to gain commercial traction and 2) test the chemistry between the founders and the Pace team. We look for several things but most importantly: Does the product do what it is intended to do? How easy is it to explain to others? What are the missing features? We also see how founders respond to our feedback. Do the founders get defensive or see it as an opportunity to openly discuss details about what is working and not working?
We prefer to have this call before entering any dataroom to avoid confirmation bias on the call. Following the call, we will internally discuss the parts of the business’s primary product features. We want to understand how the business differentiates its product or service from competitors’ offerings and identify its competitive advantage. Is the advantage sustainable? Why or why not?
It usually is at this point that we like to enter the dataroom and validate what we have learned to date. In parallel, we will speak with others in our network and, with the previous round, lead investors to understand their due diligence and current views on the product. This part takes about 1 to 3 weeks to complete.
After this stage, it should be evident whether, and what type, of support we will be able to provide.
Stage 3: Evaluating the GTM Strategy
Timeline: 1 week
The GTM Meeting is again a ~60 to 90-minute call where founders present the go-to-market strategy. Pitches can take any format, virtual or in person, but our approach to this part of the process is that it is a brainstorming session with founders to assess “How big can this get?”. Following the deep dive into the product, we will come prepared with critical questions and ideas on various components of the GTM strategy.
We need to hear how deeply the founder understands their business model and the profile of the first target customers (“customer personas”). Questions from our end will focus on where to find customers going forward, why they would buy this product, how to retain them, how teams will collect and integrate customer feedback, how they came up with their product pricing, etc. As a Pace portfolio company, we want to be 100% behind your success, so it is important to understand where you will be able to generate future revenues and how we can support you on that journey.
After this meeting, we will once again validate the business’s main competitors and their funding lifecycle, debate internally and agree on whether to present this to our Investment Committee (“IC”) for a final decision. If we have yet to meet the founders in person, we will arrange to do so before presenting to the IC.
Stage 4: Preparing our Investment Memo
Timeline: 1 week
Our standard investment memo covers all the business’s salient parts and summarizes the discussions and meetings we’ve had with teams up until this point. It usually takes us a maximum of one week to complete as, during the preparation, we might have some follow-up questions which arise and require a bit of back and forth with founders.
Stage 5: Present to the Investment Committee
Timeline: 1 week
Our IC comprises a very small number of people, allowing us to move quickly, and we can commit to providing a final answer on whether we will invest within one to two weeks following the GTM call. Therefore, in most instances, we can complete stages 4 and 5 within one week.
As we do not lead deals, we will follow the lead investor’s standard term sheet and commit to closing as soon as possible and prefer to be one of the first investors to wire funds after the deal has been signed.
We would love to meet you if you’re a seed-stage founder building a category-defining start-up in the Health or Greentech space. Please reach out to anyone from the PaceVentures Team.
Starting a successful start-up takes a lot of time, dedication, and hard work. Raising funds can be even more challenging, especially when new to the process. At Pace Ventures, we believe in radical transparency. We want to summarize our approach to making seed investments to give founders a sense of where they stand if we’re fortunate to speak with them.
While not a hard and fast rule, we generally want to meet with founders at least three months before they start to raise their next round. This helps us understand if there is chemistry between parties and provides insight into how well teams execute against previously mentioned inflection points. It also helps us understand where to add value once the transaction has been finalized.
For the most part, we have a diversified portfolio approach, which means we target to invest in around 30 companies over the fund’s life. Given our fund size, our average initial check size is close to $1mm, and with this size check, we want to have between 5 and 10% allocation per investment. Furthermore, we are thesis-driven investors and do a healthy amount of outbound reach to start-ups. We are currently most excited about the following areas:
We supplement our research and deal flow by speaking to founders and other investors in our network. We do not lead deals and believe in the power of reciprocity, so we actively share (with founder permissions) deals with others in our network.
On average, we will evaluate around ten deals per week and invest in 6 or 7 companies per year. Said in another way, we will invest in ~1.4% of all the companies we evaluate annually. More significant funds with larger teams, will evaluate more deals but also only invest in around 1 to 2% of all the deals they see annually.
Once founders are actively raising, a five-step process is initiated, lasting between 4 and 6 weeks from start to finish.
Stage 1: Evaluating the Team
Timeline: 1 Week
The first step is to schedule the first call with at least one, preferably all, of the founders. Although we are a small team, we try our best to have Katharina and me on every first call, but sometimes, given the sheer volume of deals, it might just be one of us. A typical introduction call will last 30 minutes. We spend most of the time learning more about the founders’ motivation for building that particular company and sharing more about ourselves and Pace Ventures.
Following the call and over the next seven days, we will do some additional basic research into the space to understand the level of competitiveness and speak to as many subject matter experts to validate the problem.
Stage 2: Evaluating the Product / Service
Timeline: 1–3 Weeks
If there is internal alignment to move forward, a follow-up call is scheduled with the entire founding team to delve deeper into the product/service (i.e., roadmap, features, learnings to date, insights, etc.).
The typical product/service call will last between 60 to 90 minutes, depending on the stage of the company and the product readiness. The goal of this session is twofold: 1) work through the 2–3 essential parts of the product that is critical to gain commercial traction and 2) test the chemistry between the founders and the Pace team. We look for several things but most importantly: Does the product do what it is intended to do? How easy is it to explain to others? What are the missing features? We also see how founders respond to our feedback. Do the founders get defensive or see it as an opportunity to openly discuss details about what is working and not working?
We prefer to have this call before entering any dataroom to avoid confirmation bias on the call. Following the call, we will internally discuss the parts of the business’s primary product features. We want to understand how the business differentiates its product or service from competitors’ offerings and identify its competitive advantage. Is the advantage sustainable? Why or why not?
It usually is at this point that we like to enter the dataroom and validate what we have learned to date. In parallel, we will speak with others in our network and, with the previous round, lead investors to understand their due diligence and current views on the product. This part takes about 1 to 3 weeks to complete.
After this stage, it should be evident whether, and what type, of support we will be able to provide.
Stage 3: Evaluating the GTM Strategy
Timeline: 1 week
The GTM Meeting is again a ~60 to 90-minute call where founders present the go-to-market strategy. Pitches can take any format, virtual or in person, but our approach to this part of the process is that it is a brainstorming session with founders to assess “How big can this get?”. Following the deep dive into the product, we will come prepared with critical questions and ideas on various components of the GTM strategy.
We need to hear how deeply the founder understands their business model and the profile of the first target customers (“customer personas”). Questions from our end will focus on where to find customers going forward, why they would buy this product, how to retain them, how teams will collect and integrate customer feedback, how they came up with their product pricing, etc. As a Pace portfolio company, we want to be 100% behind your success, so it is important to understand where you will be able to generate future revenues and how we can support you on that journey.
After this meeting, we will once again validate the business’s main competitors and their funding lifecycle, debate internally and agree on whether to present this to our Investment Committee (“IC”) for a final decision. If we have yet to meet the founders in person, we will arrange to do so before presenting to the IC.
Stage 4: Preparing our Investment Memo
Timeline: 1 week
Our standard investment memo covers all the business’s salient parts and summarizes the discussions and meetings we’ve had with teams up until this point. It usually takes us a maximum of one week to complete as, during the preparation, we might have some follow-up questions which arise and require a bit of back and forth with founders.
Stage 5: Present to the Investment Committee
Timeline: 1 week
Our IC comprises a very small number of people, allowing us to move quickly, and we can commit to providing a final answer on whether we will invest within one to two weeks following the GTM call. Therefore, in most instances, we can complete stages 4 and 5 within one week.
As we do not lead deals, we will follow the lead investor’s standard term sheet and commit to closing as soon as possible and prefer to be one of the first investors to wire funds after the deal has been signed.
We would love to meet you if you’re a seed-stage founder building a category-defining start-up in the Health or Greentech space. Please reach out to anyone from the PaceVentures Team.