At Axell, we fundamentally like large problems that are amenable to technology solutions. We seek out unfair advantages: proprietary and protected technological advances, business model innovations, unique partnerships and top-notch teams.
What we work on
Significant technology or business model innovation
Unusual technology approaches, ventures into new markets or contrarian approaches to existing markets.
“Black Swan” ideas with significant upside or a significantly better mousetrap
Black swans are high-impact innovations beyond the realm of normal expectations. As Nassim Nicholas Taleb put it, black swans are characterized by rarity, extreme impact and retrospective predictability.High-impact investments can change the dynamics of large markets. Can we alter the design of an engine to substantially change its efficiency and make it more economic than hybrid drivetrains? Can we make cleaner building materials? Going beyond normal expectations means we take on the challenge of rethinking the familiar. Can we store energy in elements other than lithium? Or can we make lithium-ion batteries better?
Large markets, either existing or newly enabled by the innovation at hand
Will you disrupt a large existing market? We love breaking monopolies. Or can you find a billion dollar market (versus a million dollar market) with a credible path to grow?
Short innovation cycles
Startups by nature take on more risk than larger, established competitors. However, the nature of startups also adds significant difficulty to getting large, capital-intensive projects up and running. Instead, we look for rapid innovation cycles so proof points and results are available quickly (whether good or bad). That said, we also break our own rules; we have invested in a nuclear reactor with long innovation cycles because other factors were compelling.
Every plan has risks, and we both understand and cherish risk. But we prefer technology risk to market risk, and we prefer to remove technology and business risks up front. Clearly identified and understood risks, along with a cogent plan for removing those risks for the least amount of money, is an important criteria for evaluating ventures. It is more advantageous to all parties to fail in six months and on $75,000 than in six years and $75 million — we want to focus on the key risks early.If you have a compelling technology-based story or are exceptionally accomplished or credentialed, we are willing to listen. We are not looking for good ROI; we are looking to build companies. In our view, the ROI follows the company building. We will help you redefine your plan to meet these criteria if the technology breakthroughs are significant.
How we work
Our focus and mission: assisting entrepreneurs
We assist great entrepreneurs determined to build companies with lasting significance.
Knowing and doing what it takes to foster winners
We are in the company-building business, not the “deal” or “capital” business. We have a history of leveraging relationships to build teams, attract partners and customers and then–together–build billion dollar businesses.We are active partners who do everything we can for our companies and have not forgotten how to hustle. We get our hands dirty.
Strategic advice, creative ideas
We opine on and sometimes help refine business plans. We love working together to turn something good into something great. Are we working to protect against the worst that can happen? Are we leveraging the upside? Are we planning for assets as well as liabilities? When good isn’t good enough, we help you think outside the box, and we help you change the rules. Every business goes through pivotal moments – cave on a term or lose a customer, cancel the product line or keep it in market, make a key hiring decision. We have made most of these mistakes before. Now, we can help or find someone in our portfolio who can help you think through what to do.
A direct, straightforward style
We prefer brutal honesty to hypocritical politeness. We seldom vote against management teams in our board roles, but we can have strong opinions. We will challenge you without confronting you. Once we pick a management team, we back it and don’t second-guess it. We are less about sweet talk and more about helping you build a business. We are definitely not about controlling ownership in your business.
How we decide
We differentiate our investments between two funds, which have slightly different criteria. Our seed fund consists of “science or innovation experiments,” where we often are the sole investor. Our main fund consists of more traditional ventures, from early to later stages, in all areas of technology.
We look for “A” teams and founders – entrepreneurs who know what they know (and are the best in the world at it) but also know what they don’t know and are open to building strong teams to fill in those knowledge gaps. We invest more in people than in a specific plan, because plans often change.
It also is important to know what you are looking for from KV. Why have you sought out us specifically?
At the seed stage, we’re looking for a crazy idea that may have a significant chance of working. We want good teams. We don’t need complete teams or even complete plans, but the key technology risks of your approach—and the economic and market benefits, if it is successful—need to be identified. From a seed perspective, planning for risk elimination at the lowest possible cost is the key variable. Your seed plan should validate your hunches about the market and help you decide what market segment you want to enter.
For our main fund, we assume that a reasonable portion of the risks and milestones associated with seed-type investments have been mitigated, though we understand there is still significant technology and execution risk. While our focus remains on the capabilities of the underlying technology, we want to understand what risks remain (and what you’re doing to mitigate them), as well as your production / go-to-market approach. Markets, financials and full teams become more important, though we still accept gaps in the complete picture and business plan. But clear identification of the key success variables and missing pieces is important. What are you looking for from KV? Why have you sought out us specifically?