Our company selection system utilizes a proprietary software platform that leverages artificial intelligence, machine learning, and robust integrations with other leading services including Asana, Box, DocuSign, Google, Mailchimp, MSFT, and Slack. Teams typically find high value in the platform and incorporate it into their overall workflow. This allows us to track our portfolio teams across all aspects of their business, while at the same time scoring the likelihood of success from first contact, through investment, and as the team matures and grows over time. Prior to launch, the system was trained and refined through extensive Monte Carlo analysis, which was run against hundreds of thousands of early stage investments. Overall, our systems and processes allow our team to evaluate an enormous number of investment opportunities. In fact, we routinely source and evaluate 500 to 1,000 potential investments each month.
Quake Capital has channel partners that allow it to source the best startups from among thousands of companies from around the world. Quake Capital runs each startup through our accelerator program with a track record that speaks for itself. Many of our companies go on to receive further funding. During our accelerator, we have weekly mandatory one-on-one meetings and roundtables with qualified and knowledgeable mentors from various industries. Every week we require our entire cohort to give us an update that includes goals, metrics, and obstacles they may be facing.
Our team seeks to mitigate many of the risks associated with early stage investing by looking for value and diversification across industries, markets and geographies. To help with this, all of our startups spend 12-weeks with our team, working to build out their business and accelerate growth. We are very active investors in all of our portfolio companies.
Each of our three offices has its own managing partner as well as supporting principals. Our managing partners and principals come from diverse backgrounds and are extremely well-versed in the startup and venture investment world.
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We typically invest between $100k and $250k in exchange for 4-15% equity, depending on the valuation of a company. Our average investment is $150k in exchange for 4-7% equity.
When considering a deal we prioritize traction, seeking startups that have already solved significant issues and who can demonstrate quantifiable product market fit. We also look for an experienced and well-structured team, a tech-enabled solution, and a large opportunity for growth. Assuming all of these elements are present, then we dig into the details - speaking with customers, validating financials, and negotiating terms. We believe we are able to capture great value through this process. In fact, our current cohort has multiple teams producing in excess of $100K in monthly recurring revenues, all with valuations below $4M.
We aim to provide the K-1 once a year prior to the April 15th tax deadline.
Unfortunately we do not allow investors to pick and choose. Given the number of deals we review, the fantastic valuations we are able to negotiate, and the tight deadlines we are typically under to close, we simply do not have time to review every deal with all of our investors. We take our responsibility to our investors very seriously and we work very hard to source and select the very best teams, as evidenced by our performance up to this point.
Our investment minimum is $50K and is also subject to all other SEC regulations.
Before a cohort begins, we open up applications for a period of typically 3-4 months. During that time, we produce due diligence reports that allow us to rank each company both individually and against their industry. After a few rounds of interviews that substantially cuts down the number of suitable applicants, we arrive at around 15 companies and make our offers from there. We recently automated our application platform, incorporating artificial intelligence and machine learning throughout the system to further streamline and improve the process.
According to the SEC, an accredited investor is someone who earned income that exceeded $200,000 (or $300,000 together with their spouse if married) in each of the prior two years, and reasonably expects the same for the current year, OR has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
Investing in early stage companies is very risky. Nothing can fully eliminate the risk involved in investing with startups. However, our most recent cohort received well over 1,000 applications, of which we selected just 16 for investment. In addition, we take a very active role in the operations, growth and strategy of our portfolio companies. In short, we work very hard to mitigate the risks typically associated with early stage investing.
The information in this website about Quake Seed Capital Fund II, L.P. (the “Fund”) is qualified in its entirety by reference to the information in the Confidential Private Placement Memorandum regarding the offering of Limited Partnership Interests in the Fund, the Fund Limited Partnership Agreement, and the Fund Signature Package, copies of which are all available for download on this website prior to your making an investment in the Fund, or upon request.