Pinpoint Ventures
Disruption often comes from the boundaries between disciplines, so we don't have have rigid rules on sector. However, our experience and expertise limits the focus of activity away from some sectors, as this table illustrates:
| We love... | Interesting... | Not for us... |
|---|---|---|
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The Pinpoint model is focused on embryo businesses with the potential to grow exponentially. In our experience, the most powerful driver of that potential is the scale of the market opportunity that can be disrupted with the technology.
That does not mean there is no virtue to pursuing a clear subset of the market as a primary target, but we will be looking that the differentiation will apply to the whole of the main opportunity.
| Market size | Differentiation | Suitability |
|---|---|---|
| Addressable market >$10bn | Technology is pivotal/highly disruptive | Highly attractive opportunity |
| Addressable market $100m | Technology is important differentiator | Interesting market opportunity |
| UK specific market worth <£5m p.a. | Technology being useful but not highly differentiating | Unsuitable market opportunity |
Like all deep-tech specialists we require that the IP behind the company, and/or the IP that will be built in the course of the company is truely an important protection against competitor entry.
This is vital because this class of companies usually exits to corporates for the value in the technology, and at the point of acquisition they will ask questions internally. Consider if you were CTO of a potential acquisitor and where asked the question:
"Could we build something functionally equivalent, how long would it take and how much would it cost?"
The answser to that question will set a cap on how much they will pay to acquire your company. Another way of looking at the question, particularly if you hope to exit to a less technically capable acquisitor is:
"Could a competitor who saw my product recreate it offshore?"
Our internal yardstick is the $50k test: if we think we could copy your product offshore for that we are unlikely to invest.
Finally please note that we don't have a strong preference for you to have even filed patents. The quality of IP advice to startups is patchy, so we frequently see companies where the IP strategy has been sub-optimal. For instance, a good proportion of patents we see in startups are unenforceable, for example:
"If your IP is implemented on a server or behind closed doors, your competitors will do the same. A patent in these cases can be worse than useless; telling competitors how it's done, but at the same time making it impossible to show that the competitor is infringing."
A complete team is not expected at this stage in the venture's life. However, developing the right team as the venture grows does depend on the calibre of the starting point.
Only in exceptional cases are we likely to back a team that does not have an strong technical founder. We have had poor experiences with companies that contract-out all their technical development without the detailed understanding of their work to manage it effectively.
Pinpoint Ventures can help you build the right team from the start.
Pinpoint Ventures is based near Manchester and interested in companies across the UK but particularly those based in the North of England.