Investment Criteria

What kind of companies does Southern Cross invest in?

Southern Cross is committed to helping companies with the potential to become a dominant player in a strategic market segment. Each potential investment is evaluated on its individual merits. We look for companies that are able to leverage its leadership position into related areas. Southern Cross's current investment focus is primarily in the areas of: telecommunications, systems software for the enterprise, security, services, and environmental science/energy.

At what business stage does Southern Cross typically invest?

Southern Cross primarily invests in the first round of institutional investment. We also selectively invest in seed and the second or later rounds, depending on the opportunity and our ability to add value. With all our investments, we have the ability to continue to invest in later rounds of financing.

What is the typical size of a Southern Cross investment?

Investment ranges from as little as $100,000 to more than $5 million in larger growing companies. Typically we invest $2 - $5 million initially with the ability to invest more money in later rounds. Frequently we serve as the lead or co-lead in most investments.

What are Southern Cross's investment criteria and evaluation process?

We look for companies with the promise to change business and offer customers much better value for money (very strong ROI). We like companies that have:

Talented management teams/founders
Products/services that are based on deep intellectual property and are highly differentiated
Sustainable competitive advantages
Substantial market opportunities
Clearly focused, credible growth paths

Our decision process can last anywhere from several weeks to several months. A typical a time frame is six to eight weeks. A company we are interested in will make two or three presentations to the Southern Cross team as the opportunity is being evaluated. In addition to product demonstrations and a business plan review, Southern Cross places a lot of emphasis reference checks with the company customers (or potential customers) and the entrepreneurs. We want to understand why a customer would buy the product, where a company fits in the competitive landscape, and if the entrepreneurs can build a high value business.

We strongly believe that personal chemistry, relevant previous experiences and relationships, and a shared set of objectives are all important components of the investment decision, for both the entrepreneur and Southern Cross. We will not invest in a company where we do not share a mutual vision and common set of objectives.

What role does Southern Cross take after the investment is made and what help can you provide?

We are an active investor with a "hands-on" approach to building company value. We look for management teams with whom we can build a true partnership relationship. We will help you in every way we can to ensure your company succeeds.

We do not want to run your business -- we are backing you. Instead, we will assist with recruiting, strategy, partnerships, customers, sales channels, strategy, technology and future financing. A company might have one or two Southern Cross partners on its board of directors. Our entire team, however, works to make the company successful by tapping our network and using our experience. Our network includes portfolio companies, strategic partners, service firms, and potential management team members.

What is the best way to approach Southern Cross?

Email works and so does voicemail. While it is not necessary, a good way to approach us is a through a referral from someone we already have done business with. It might be a Southern Cross partner, or someone who is part of our network – a founder at one of our portfolio companies, a co-investor, a lawyer, an accountant, a consultant etc. If you cannot find a mutual contact point then you can email us an Executive Summary.

Executive summaries should be brief (3 to 5 pages) and to the point. Key topics to cover:

Succinct description of the product or service and how it's differentiated -- value to customers
Specific backgrounds of key team members
Market overview -- need, size, drivers and competitive landscape
Selling strategy (channels) and market positioning
3-4 year financial projections summary
Capitalization summary (ownership and amount of money needed)