The Kegonsa Seed Fund I, L.P. (the “Fund”) investment strategy utilizes a “Money for Minnows” approach. The Fund makes smaller investments in a narrow dollar range. The Fund’s initial seed investment range in a portfolio company was less than two hundred thousand dollars. The ownership range of the Fund in each portfolio company was also narrow typically 20 to 25%. The strategy relies on the skill of the entrepreneur to be the largest component of investment success.
Investor risk is managed by investing in numerous different technologies. The Fund management conducts substantial due diligence on the entrepreneur and team to confirm their ability to implement the portfolio company business plan. The Fund typically doesn’t make ongoing investments in portfolio companies relying on the company’s success in the marketplace to determine the company’s future value. With more minnows the Fund expects an investment return with small exit values. Typically acquisition by larger publicly traded companies.
In contrast a “Whale Hunting” strategy makes larger investments in a targeted technologies. The Whale Hunting fund management typically has significant experience in the targeted technology marketplace. Typically funds utilizing this strategy make multiple and typically larger investments in their portfolio companies. Risk is managed by the fund having a strong expertise and presence with the select technologies. Investment return is with significant exits or initial public offering.