42 MICRO FUNDS.
for serial entrepreneurs
The big idea. A unique investment platform for the high-net worth private
investor and entrepreneur that want to invest in extraordinary business ideas
and take an active role across the investment cycle. We scout, report and assess
candidates. You invest. We build and develop together.
42associates.com
Why?
Private placements
on the rebound.
For high-net worth serial entrepreneurs with capacity and power
to build new companies the current investment climate market is
tricky. Stock market is heated, and most bond and private equity
investments are struggling to meet ROI thresholds. However, in the
wake of the crisis, ventures are in a better shape than ever. This is
evident for several reasons.
First, money raised by venture funds is on the rise and already up 40% compared to the 00’s. Deals are
getting bigger and later stage than in the previous decade. In 2013, US alone, venture deals totaled to an
impressive $30 billion in investment.
Nearly half of this, was in Silicon Valley area. This includes 70.000 angel funded deals. In Denmark we see
a similar pattern. Private investors placed more than DKK 256 m into start-ups and growing businesses in
2013. Up by 120% compared to 2010.
Second, pre-money valuations for all series (A-C+) are at decade highs. The number of unicorns - privately
held companies valued at $1 billion or higher – rose from 10 companies in 2000 to 49 companies in 2014.
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What?
Your own micro fund hosted by 42
Instead of investing in bonds or managed index stocks, you invest
parts of your wealth in your own Micro Fund hosted and marketed
by 42 and targeted your specific areas of interest – being fintech in
general, more mature businesses with untapped potential or more
specialized domains such as 3D Printing or Wearable technologies.
As a Micro Fund owner with 42 you become part of an international community of likeminded entrepreneurs
and investors and gain access to a variety of value added services that 42 offers to the international Micro
Fund community.
The basic idea is based on a very simple model:
SCOUT
EVALUATE
SCOUTING
FACTORY
PRESENT
COMMUNITY
SERVICES
INVEST
SCALE/BUILD
EXIT
CO-INVESTMENT THROUGH 42 VENTURES
We scout, evaluate and present. You invest, scale and build. Either alone, with your preferred team of
co-investors or by leveraging 42 global capabilities, experience and reach to drive value creation.
Each Micro Fund and its associated services is configured to each investor investment preferences and
areas of interest.
Currently, we have micro funds running in the following domains:
• 42 – IoT & authentication
• 42 – Connected Home
• 42 – Wearable Technologies
• 42 – 3DP & Customization
As our investors show interest within other areas more will open.
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How?
All the benefits – without the usual costs
Our operating model for the micro funds consists of two elements.
First, a global scouting platform - 42 scouting factory – a dedicated team to build a qualified pipeline of
candidates within your area of interests.
Secondly an option to co-invest with 42 by leveraging our firm’s global capabilities, experience and reach to
deliver sustained advantages to your investment.
No management fee. No cash deposit. No overhead. You pay an annual membership fee for our scouting
and case evaluation services and you pay a finder’s fee when you close a deal with one of the candidates in
your pipeline.
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Scouting together
A Micro Fund needs to have a constant feed of candidate investments.
A deal flow that fits your investment criteria and domain interests.
Our global scouting factory with a dedicated scouting team in Copenhagen and San Francisco will be your
guide to the future. Your candidate pipeline will be regularly assess either ad hoc or through regular report
based on your preferences.
Additionally your candidates – as well as candidates from other Micro Funds – will be visible on you own
online platform where you can keep track of candidates, investments and keep a log of rejected cases as
well as upload your own candidates and of course connect with other Micro Fund owners around the world.
The scouting factory leverages multiple scouting sources:
• 42’s industrial network of business partners and clients
• 42’s scale platform for igniting and accelerating new tech start-ups
• 42’s consulting partners in The Future Agency and Singularity University
• 42’s academia partners such as Hyper Island, MIT and Stanford University
• 42’s access to multiple beta-lists and open scouting sources online
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Investing together
On a case by case basis, 42 will co-invest alongside you and your
team. This option exists for all Micro Fund owners and we evaluate
each of the candidates carefully. We only co-invest in cases where
our global firm’s capabilities and experience can be of value across
the investment life-cycle.
When we invest together we look for:
1. Big Ideas - Ideas, technologies and innovations with potential to solve complex industrial
problems or solutions to some of the world’s grand challenges
2. Growing Ventures - Early stage B2B companies with attractive portfolios and scalable business models in attractive high growth domains
3. Mature Businesses - Late stage businesses with untapped global growth potentials or significant turn-around upside.
For big ideas we will consider making cash injections. For later stage Series B and C, we will often waive
our fees for equity or upside.
While we share this particular profile with some investors, each Micro Fund owner should pursue his/her
own profile.
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Building together
The value of your investment portfolio primarily depends on our ability to present the right cases and our collective ability to scale and
build the companies in a well-defined value creation logic and in close collaboration with founders and management.
Some of the key value levers on strategic, tactical and operational level are:
Early value levers can include:
• Market potential
• Equity story / market story
• Development and test of new prototypes
For a later stage companies additional levers will include:
• IP strategy and distribution / channel rights management
• Need-based customer segmentation and CX design
• Building a brand and a proof-backed value proposition
For more matured enterprises activities could include:
• Setting the strategic and commercial modus
• Building an efficient manufacturing blueprint
• Ongoing support in executing defined projects (strategy office)
Depending on your investment, preferences, and capabilities, we would expect you to inter into board positions, providing expert assistance, or even take operational positions. Regardless of what you do, you will
be investing in a community of like-minded.
42 Micro Fund offering
1. Your own fund – Access to 42 scouting factory
2. A global community of likeminded investors
3. Your own it platform and investment dashboard
4. Quarterly feed of new investment candidates
5. Business cases and fact-based investment briefs
6. Trends and news scanning within fund domain
7. Invitation to annual inspiration summit to San Francisco
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Getting started
If you are considering establishing a Micro Fund, there are a number
of elements you need to consider, before we can start scouting for you.
• Your area of passion, interest, and expertise
• The level of maturity of our scouting activities
• Your service and community preferences
Firstly, you need to consider your area of interest or expertise. Since most of our investors have built and
sold businesses before, they naturally have an area of passion, interest and expertise. Therefore, the natural
start will be to build from there, since you will be able to add value in your own capacity through active
ownership.
Second, you need to consider the maturity of the investments you are considering. Some investors are
interested in very early ideas that may have proof of concept. Other possibilities include later Series A and
early B investments, where there is a clearer “line-of-sight” in terms of proof of business and scalability.
Third, you need to consider your other preferences. These can include whether you prefer to invest alone (or
even anonymous), or, like many, together with other investors. This can include investing with 42 Capital.
Other preferences include which activities you prefer (e.g., how often we meet, reporting format, and
community participation).
For more information.
Please contact
42 Associates
[email protected]
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42 Associates
Christian IX’s Gade 7
DK-1111 Copenhagen K
Tel.: +45 4236 4000
[email protected]
42associates.com
42 Associates Inc.
44 Tehama Street
San Francisco, CA 94105 · USA
Tel.: +1 415 812 6646
[email protected]