SoCal PE Group
We’ve been investing in software companies since 1996 and our focus is on two types of companies.
AI Software Companies and Healthcare Startups with less than $1 million in annual revenue and gross profit margins of at least 80%.
Growth Companies with Annual Revenues Between $5 million and $15 Million growing at 10-20% per year.
INVESTMENT CRITERIA
SEED & STARTUPS | GROWTH COMPANIES
Must Haves For Your Business
- AI industry agnostic or healthcare specific software
- Unique, innovative, and disruptive
- Addresses a large market need or opportunity exceeding $50M ARR
- Potential for rapid growth and scalability
Founder(s)/Team
- Experienced and capable founder(s) with relevant domain expertise
- Passion, drive, and commitment to the business
- Ability to execute and adapt to changing circumstances
Market Opportunity
- Large and growing addressable market
- Competitive advantages and barriers to entry
- Clearly defined target customers and market positioning
Business Model
- Viable and sustainable revenue model
- Potential for 80% + gross margins and profitability after no more than 3 years
- Clear path to monetization and revenue generation
Technology/Product Development
- Proprietary technology or intellectual property
- Realistic development roadmap and milestones
Traction
- Early customer or user adoption of at least one company
- Promising initial traction metrics (revenue, users, pipeline, etc.)
- Validation of the product-market fit
Funding Requirements
- Reasonable funding needs and proper use of funds
- Capital-efficient operation and spending plan
- Potential for follow-on funding rounds
Exit or Long-Term Hold
- Attractive potential exit opportunities (acquisition, IPO, etc.)
- Scalable business model for venture returns
- IRR of 18%-28% for < 5 year exit or 12% to 15% IRR for a long-term hold
Valuation
- Shall be calculated & modeled on a risk on formula based on annual growth rate, GPM, NPM and trajectory thereof
- Investor rights and protections
Advisory and Board of Directors
“Fractional Positions Are Acceptable”
- For seed money and start ups, it is mandatory that we have at least two board members
- CTO
- CFO
- CMO
- Minimum of three vertical/domain specific advisors