Cooach Equity
Equity investments built on operational depth.
Cooach Equity primarily invests in minority stakes in companies in the go-to-market phase — what we call ramp-up.
Cooach Equity primarily invests in minority stakes in companies in the go-to-market phase, or ramp-up as we call it. This is widely considered the most difficult phase to invest in, and often where entrepreneurs fail due to overconfidence in their own product's ability to “sell itself”. We have no particular focus on industry or business model — instead we choose entrepreneurs who have already proven they have what it takes to succeed. We are financiers, not company builders. We don't aim to find the absolute home runs and we like solid entrepreneurs who may lack network and operate in unusual geographies. By avoiding too many duds we can still achieve good returns. Our target is around 30% per year.
Our investment model is designed to reduce the number of failed investments and can be summarised in three points:
Point 1
Lend first — invest later
Cooach has neither the dealflow nor the human resources to evaluate everyone who pitches and seeks equity capital. However, we can reduce the time an entrepreneur spends finding investors from months to weeks by instead offering secured entrepreneur loans combined with a conversion option. A convertible-like structure, but with a focus on it being a loan. By requiring collateral we naturally screen out many good entrepreneurs who don't have that option, but we also reduce the risk of capital losses for our investors.
Once an entrepreneur has proven they can scale and manage interest payments, and the business develops in line with the “pitch deck”, we can exercise the conversion option and invest with the benefit of hindsight.
Point 2
Get to know first — invest later
Cooach Group provides business support services to growth companies — often companies that have just raised capital or are about to. In our work with the entrepreneur we can draw conclusions about both financial development and the entrepreneur's and organisation's ability to drive the business forward and create shareholder value.
Once we have monitored a company for at least 12 months we can invest. Partly through cash share issues via Cooach Equity, and partly by Cooach Group exchanging services for shares that are then contributed in kind into Cooach Equity.
Point 3
Project financing
The SPVs that Cooach Equity creates and through which specific financing projects are handled can be seen as a kind of “green field investments” where Cooach Equity receives ownership stakes as compensation for the idea and execution.
Financing of Equity investments is done through issuances of B-shares in Cooach Equity AB.