How We Invest @ Jemison Alexander
Jemison Alexander invests in early-stage companies with at least one founder who identifies as female.
There are lots of different ways to invest in early-stage companies, but the purpose of this post is to describe how we execute our investments at Jemison Alexander, and how you can join us if you’re interested in backing early-stage, female-founded companies. The minimum check size to invest in one of our deals is typically $5k.
Structure
Jemison Alexander is not a traditional venture capital fund. Instead, we employ a syndicate model. Think of the syndicate model as a group of angel investors who are interested in the deals Jemison Alexander brings to the table. The syndicate model allows individual angel investors to invest alongside Jemison Alexander on a deal-by-deal basis. Being part of the syndicate carries no requirement or obligation to invest in any number of deals. Members of the syndicate can evaluate each deal that Jemison Alexander commits to in order to see if the deal fits their individual investment criteria (company, valuation and terms, trajectory, business model, industry, founding team, financials, competition, etc.).
The Squad
We’ve surrounded ourselves with a group of the brightest industry operators and angel investors. The Jemison Alexander Squad is a group of folks who are interested in either or both of the following:
investing in early-stage, female-founded startups as part of the Jemison Alexander syndicate
advising / consulting roles at the Jemison Alexander portfolio companies
You can apply to join The Squad here. It takes two minutes and we review applications daily.
Process
General Partner Ryan Perlowin vets hundreds of early-stage companies per quarter.
We source companies through the following three channels:
Strategic outbound - here we reach out to specific high-traction companies that fit our investment criteria.
Introductions - we have a deep network of both founders and other venture investors and love introductions from these folks who we know and trust.
Inbound - unlike many VCs, we evaluate each deal that comes to us through inbound. No introduction is required. This requires hustle and efficiency, but sometimes incredible deal opportunities surface through inbound, and we want to be able to capitalize.
We go deep with a subset of companies that we vet (2-3 meetings with the founding team + initial diligence).
If there is alignment on the opportunity, deal terms, and investment allocation, we run a full diligence process led by our GP. We get full access to the company’s data room, financials, metrics, organizational docs, cap table, etc.
We are highly selective for which companies we choose to invest in. Once we decide to invest, we commit to a certain allocation with the founder.
For instance, if a company is raising a $4M seed round, we might look to take a $500k portion of that round.
We care deeply about who is co-investing alongside us and who is leading the round. These are important social signaling points that we’ve found to matter very much. However, we never rely on other investors’ diligence.
Once we’ve decided to invest and agreed on the investment allocation, we list the deal on our AngelList syndicate page.
This page is not publicly viewable; only admitted members of the syndicate can access.
Our GP writes a full deal memo about the investment opportunity and includes all relevant information (deal terms, past investment rounds, company information, market size, revenue and financial, customer traction, product overview, competition, technology evaluation, founders and team evaluation).
GP sets a target investment close date. The typical range for this is 1-4 weeks.
Members of the syndicate can evaluate the deal and decide whether they want to invest or not.
For the investment itself, our legal team (via AngelList) will spin up an SPV, or special purpose vehicle. A SPV is an entity (LLC) whose purpose is to be the single investment into the portfolio company. Portfolio companies prefer this because Jemison Alexander (and all of the angel investors who invest with us) are just one line on the company’s Cap Table, or their list of investors. Here’s more on the specifics of an SPV.
For example, let’s say that the $500k round mentioned above (for the $4M seed) is filled by 50 investors putting $10k each into the deal. In this case, each of those 50 people would own 2% ($10k of the $500k) of the LLC. The LLC would be called something like “YX Fund I, a series of Jemison Alexander Ventures, LP” and that LLC name would be the sole investor into the portfolio company.
Our typical check size is $250k-$500k. Our typical minimum check size for an individual to join is $5k.
Once we fill the full allocation (eg. $500k in the example above), the deal will begin its closing process.
AngelList charges a small fee and there are additional small state filing fees that the SPV must pay. These fees are taken out of the amount raised for the investment and shared proportionately across the investors.
For instance, if we have a $500k allocation, we will likely look to raise ~$510k. The fees for a deal this size would be roughly $10k. Our final check to the portfolio company would still be $500k.
AngelList is the most trusted company in this space. They handle all:
ACH/wiring through Plaid. No investor financial information gets passed to anybody at Jemison Alexander.
Back office and tax compliance; you’ll receive any relevant tax documents (eg. K-1s) directly in your AngelList portal.
Distributions and payouts; when a company you invest in has a liquidity event (eg. acquisition, IPO), AngelList handles all payout and distribution details and wiring.
Once all investors in the deal have signed and transferred their investment to AngelList, the deal typically closes in a few days. We’re now officially investors in that startup!
Post-Closing Expectations
Investors who participate in a particular deal will have full and constant access to the deal information (docs, tax forms, etc.) directly in their AngelList portal. We have been very impressed with AngelList as a service provider.
Portfolio companies typically send company updates at some cadence (eg. monthly, quarterly). We forward all company updates to all of the SPV investors so you can stay up to date on your investments.
Jemison Alexander Compensation Structure
Jemison Alexander’s General Partner personally invests in every deal that the syndicate runs.
Jemison Alexander charges a one-time management fee (3%) to cover the operational costs associated with running Jemison Alexander. Traditional venture capital funds charge 2% annually over the 10-year life of the fund (20% of all invested capital goes to fees).
Jemison Alexander charges carry on each deal. Carry, short for "carried interest," represents the percentage of profits that are paid to the lead of the SPV. More on carry here.
What happens if you have questions?
Email General Partner Ryan Perlowin directly: ryan@jemisonalexander.com with any questions.
Requirements
Only Accredited Investors will be able to participate in any SPVs organized by Jemison Alexander. You can learn more about the requirements here.
This post is not intended to serve as investment advice. Investing in early-stage startups is extremely risky. Many early-stage companies fail; investments in early-stage companies bear the risk of full loss.
Jemison Alexander invests in early-stage startups with at least one founder who identifies as female. You can learn more at www.jemisonalexander.com.
If you fit our investment criteria and would like to pitch us, email General Partner Ryan Perlowin directly: ryan@jemisonalexander.com
If you’d like to advise our portfolio companies or invest alongside us in future deals, apply here to join The Squad. Our SPVs are typically $250k-$500k and minimum angel checks to join the SPV are typically $5k. Note that only accredited investors can invest.