Key Fund Components

Fund Size

A Signal Capital Management Inc. fund may be $5 to $20 million in size and capitalized in comfortable $100,000 unit contributions from our loyal client base and their referrals. Our funds typically make investments that range in size from $750,000 in select seed situations to up to $5.0 million in quality later stage opportunities.

Diversification 

Each Signal Capital Management fund will seek to spread risk by investing in several portfolio companies across different industries, investment stages and technologies. Similar to a mutual fund made up of numerous stock positions, a typical fund will include venture capital investments in approximately 5-12 portfolio companies. Thus, the overall performance of a fund will not be overly reliant on any single investment. 

Leveraged Deal Flow 

Signal Capital Management regularly reviews hundreds of venture stage investment opportunities per year and the number seen and screened by our many co-investment partners is collectively several thousand per year. This means that for each individual company that gets added to one of our venture capital funds, there could be literally hundreds that do not make the cut. On their own, Signal Capital Management's investors would not have exposure to this volume of deal flow nor the increased investment perspective, market knowledge and selectivity that is gained from screening so many high quality opportunities. 

Subordinate Role 

Signal Capital Management will not begin to share in any generated capital gains until after all fund investors have received back their initial investment contribution plus, with some Signal Capital Management funds, an annual preferred return. Should any investment within a fund perform poorly, Signal Capital Management will not receive any carried equity compensation until the returns from the other portfolio companies make up for those losses. 

Investor Voting Process 

Signal Capital Management will continually analyze and make recommendations on quality venture capital investment opportunities; however, material decisions regarding the management of the fund require a 51% majority in interest vote of the investors. This includes decisions regarding which companies to invest in and how much to invest in each company. Signal Capital Management will prepare an investment summary which describes the company in detail, explains the results of the due diligence efforts, outlines the negotiated financing structure, provides background information on our co-investment partners and details the ongoing plan to build value and ultimately harvest the investment.