Build with Delta40
A core part of who we are as a Venture Studio is ensuring that Founders are supported throughout the process of raising capital and venture building. We understand that the world of fundraising can be an enigma for some, so we have shared a high-level view of our investment process so you can know what to expect before partnering with us.
Delta40 Investments
As a venture studio, we invest both cash ($100K- $300K as a first check, with the potential to follow on up to $600K) and in-kind shared services, in exchange for equity. Some of the benefits of working with Delta40 include:
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We are a team of experienced founders and operators who act as an extension of the venture team, from idea to scale and exit; we offer shared services including commercial, financial, talent, and strategic advisory.
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We lead rounds or we can follow based on the need of the company.
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We actively help catalyze follow-on investment, including co-creating investor materials and financial models, developing a fundraising strategy, intros to our extensive investor network, pitching on your behalf in investor circles, and sharing our DD with other investors.
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Delta40 Founders have profit sharing in the Delta40 Venture Studio, diversifying risk and reward.
We are committed to using a rigorous, but high-velocity process for sourcing, evaluating, and executing all investments. We respond to all entrepreneurs who completed our screening form within 1 month, and aim for a maximum timeline of 6 months between initial outreach and final deal docs.
Step 1: Sourcing
We are committed to investing in African and female entrepreneurs building scalable climate ventures All of the ventures we invest in must have African OR female Founders and 51% of our capital will be invested in companies led by Female Founders and C-level leaders.
To ensure a fair and open process that does not rely on personal networks or introductions, we ask all founders seeking investment from Delta40 to complete our online venture screening questionnaire so we can get to know you and your venture better. We review all responses and we aim to reply within 1 month. We cannot promise to invest in all Founders who pitch us or reply with detailed feedback, but we will review all responses and let you know if your venture is a fit for Delta40 at this time.
Step 2: Screening
Our screening process involves an assessment of your innovation and your team. At the basic level we like to ensure that your company meets our investment theses as follows:
Team
First and foremost, we invest in the founding team. We are founder-first, and are open to supporting entrepreneurs through pivots to find the right product-pricing-market fit.
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Experience: Each founder should have a minimum of 7 years of work experience, including significant experience in team management in Africa.
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Underrepresented founders: At least one co-founder must be African and/or female, with proportional shareholding in the venture.
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Employee Ownership: All companies must be willing to establish an Employee Stock Ownership Plan (ESOP), allocating a minimum of 10% of the cap table to employees by Series A. This ensures alignment and motivation within the team. Our team can help you set this up after we invest!
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Collaboration: Eager to ideate, accept feedback, and build with Delta40’s team of experienced entrepreneurs and operators in our venture studio model.
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Venture building model: Willing to award 3-10% common stock to Delta40 for 12 - 24+ months of our deep, hands-on venture studio support.
Innovation
We invest in two types of innovation to solve the biggest problems or seize the greatest opportunities in Africa - technology and/or business model innovation. We aim to build a diversified portfolio of both “unicorns” (start-ups valued at $1B+) and “camels” (companies with steady growth which don’t require a constant stream of investment).
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Livelihoods and Climate Impact: All innovations we invest in have to do two things. First and foremost, they need to increase incomes or improve quality of life for African households and they need to do this in a planet-positive way. We invest in both climate adaptation and resilience, as well as mitigation if they meet these criteria. We prioritize ventures in high-impact climate sectors such as clean energy, efficient mobility, sustainable agriculture & food, and climate fintech.
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Scalability: We look for ventures with the potential to scale and positively impact over 1 million lives in Africa. Due to the nature of venture capital investing, we need to see the potential for increasing economies of scale as you grow and/or a defensible competitive advantage in order to invest. A competitive advantage can be IP, a strong moat around your business model, and in some cases can be a first mover and execution advantage (especially for 2nd time founders).
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Commitment: We may invest pre-revenue, but we like to see demonstration of significant effort invested in developing your innovation, which may include full-time commitment to building your venture, successful pilots/proof-of-concept, tenure in the market, and/or initial angel/friends and family investments.
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Proven Technology: Hardware or scientific innovations should have a Technology Readiness Level (TRL) of at least 7, with a full-scale prototype which has been proven in the field. Software or business model innovations can have a TRL of at least 4, with an early prototype/MVP (given the quicker timelines for software development). Learn more about TRL here.
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Ability to raise follow-on capital & exit strategy: We need to see a strong ability to raise the follow-on capital you need including equity, grant and debt, with a clear pathway to profitability and an exit, ensuring a sustainable business model and liquidity for your early and growth stage investors. Exit strategies can include M&A pathways, secondaries, dividends or an IPO but should be backed up with specific examples and data. We will often speak to other investors to validate this as part of our DD process. Delta40 also helps all our companies to build robust scale, fundraising, and exit strategies after investment.
Our screening process may also involve a call with our Venture Partners who take the time to get an even deeper understanding of your venture, which will enable them to give a deeper assessment of your venture to the Investment Committee (IC). Based on that information, the IC then votes on whether we would like to proceed to further screening or the DD stage.
Step 3: Due Diligence (DD)
Once we have established alignment with our mission, we take the venture through the DD process. Our DD process is tailored towards the team, venture and the traction it has made. Based on your traction, this step could involve a deeper assessment of the problem, solution, team, product, the tech, legal requirements, financials, company formation, potential funding structure, returns and potential impact.
As an early stage investor we understand that speed is of the essence, however we run a rigorous process because we tend to lead the early stage investments we make. Our rigor enables follow-on investors to trust our assessment and co-invest with us. That said, we also understand that early stage ventures don't always have information on all these criteria so we don't reject ventures based on not having information on some of our criteria.
Step 4: Deal Execution
Once our DD process is complete, our investment committee votes on how we would like to proceed with the venture. If we choose to partner with you on building your venture, we will align on the investment amount, circulate the term sheet, finalize all other investment documents then wire the funds. If we choose not to invest in a venture that has made it all the way through our DD, we will typically offer a place within our larger ecosystem support initiatives, including entrepreneur-in-residence program and networking events.
Build with Delta40
Are you ready to build with us? Begin the process by completing our venture screening questionnaire.