Intro to UpsideDown VC 2.0
Overview
UpsideDown brings a creative alternative to traditional VC funding, angel investment, bank loans and crowdfunding to the UK. We enable founders to protect their equity and build a company with freedom from a bank or traditional VC breathing down their throat.
Why We Exist
Quite simply put, there are a couple gaps in the fundraising landscape we are trying to fill:
In the UK there are not a lot of suitable options for funding if you are a first-time, bootstrapped founder. Bank loans are difficult to get, the process isn’t always transparent, accrues interest and pressures people into paying a certain percentage per month. Crowdfunding is generally a last resort option and the majority of campaigns do not get crowdfunded.
Most VC funds are designed in such a way that the only kind of company they can go after is a unicorn-style fund returner. Thus, 95%+ of founders (including many who have/will go on to achieve substantial revenue and exits) aren’t served by existing capital options.
From an LP’s perspective, there is a market need for something that exists between VC and cash bonds/real estate. Put frankly, the UpsideDown model provides LPs with more stable and consistent returns. It retains the Upside, whilst mitigating the Downside.
What is Innovative About You?
Unlike most funds, we offer 2 options for financing for founders. Friends and Family round founders will most likely be offered a CFEA (Convertible Future Earnings Agreement), which is the hybrid flexible debt-equity instrument we use to give founders maximum flexibility and LPs downside protection. Seed founders may be eligible for a SAFE note.
For more details on our exact terms, read here.
Our Core Values
Inclusivity and diversity
Integrity
Founder-first
Transparency and clear communication
Risk-taking
Providing value even if not investing
Team
Sam Merullo- Exited founder, Operator, Venture Investor & Mentor. Sam has founded and exited a range of businesses including ScootFleet, he was the former UK GM at Lime. He has been venture investing for Family Offices and funds for a number of years.. He is a Mentor at the Founder Institute and qualified as a lawyer at Allen & Overy.
Jonathan Sun- Former founder of an Edtech app called Horizan. In parallel, he became a community and ecosystem builder, where he ran communities for founders and now for investors.
George Quentin- Current mobile engineer at Dojo, former organiser at London New Tech, graduate from Angel Investing School and active in the angel investment space.
Together, we make a young, uniquely well-rounded team that is well positioned to bring a fresh perspective to startup evaluation, breaking old patterns of traditional VC thinking. Combined, our years of startup experience will not only allow us to bring a fresh set of eyes to deal analysis, but also be able to give more tailored support to these early stage founders as they continue throughout their journey.
What Types of Companies or Founders are We Looking At? Investment Pipeline?
Generally, we’re sector agnostic, and we’re looking for companies that are capital efficient, scalable, and impactful. In terms of themes, we’re looking at 2 areas: SaaS and Consumer Goods. We’re probably not as suitable for capital-intensive types of startup ideas (such as neurotech).
In terms of stage, we look at friends and family round, pre-seed and seed startups. There are a couple ways we can help founders fulfill their capital needs.
We come in as a sole “friends and family” cheque and help an aspiring founder get from a napkin idea/landing page to a decently-developed MVP that will be enough to get his/her startup to a level that 6 figure pre-seed investors would find ideal.
We come in as a part of a larger pre-seed round where we put in a £50,000 cheque (under CFEA terms) and make up about 10% of a £500,000 round, for instance.
We come in as a part of a larger seed round where we put in a £100,000 SAFE and make up about 10% of a £1,000,000 round, for instance.
The minimum income needed for the FEA to kick off is either £30,000 a year or £2,500 a month. For applying candidates, we’d ideally prefer someone with the potential to make at least that amount if out of university (through degrees, skillset, and personality traits). An ideal candidate should also have a below 28% front end debt-to-income ratio (monthly housing cost divided by monthly gross income) and below 36% back end debt-to-income ratio (total monthly expense divided by monthly gross income).
We want founders who have the ingredients needed to be successful; namely high emotional intelligence and leadership ability, solid domain awareness (having experienced the problem yourself), willingness to learn and some grit and perseverance. You don’t need to be a perfect human being, but we want to see some potential out of you.