Investment Criteria
Business Type
AI-first/native B2B software
Locations
United States & Canada
ARR
$2M-8M
Growth Rate
40%+
Retention
85%+ Gross; 100%+ Net
Capital Efficiency
Lightly funded or bootstrapped
Deal Size
$4M-10M
Deal Profile
Minority; lead
Where Does Early Growth Equity Fit inthe Private Capital Landscape?
Venture Capital
- Focused on hypergrowth, huge TAM opportunities that need massive outcomes
- High loss ratio funds with ~30 portfolio companies that put most founders' and employees' equity at risk ("Power Law")
Early Growth Equity
- Smaller checks in capital efficient companies that have mostly de-risked PMF
- Provides founders with optionality to scale to an exit where everybody wins - or go for something bigger down the road
Growth Equity
- Similar to Early Growth Equity, not investing with a "binary outcome" mentality
- However, these firms struggle to work with companies beneath $10M ARR as their large funds have minimum check sizes of $15M+
“Andrew and Jensen have been professional and thorough since our first conversation. The customer, market, and financial diligence they performed pre-investment provided insights to me and my management team that we are using in our business today. Channel Equity laid the foundation for a great working relationship going forward, and I know I can turn to them for anything."
Shalom Reinman | CEO / Founder, Megadata
