Zell Capital invests in early stage companies, specifically in seed and Series A rounds. We invest through equity, debt and debt-like (eg revenue sharing) financing. Our aim is to partner with great entrepreneurs and teams to help achieve growth goals.
The easiest way to engage with us is through completing this form.
We do not require warm introductions and we accept inquiries from across the United States. Unfortunately at this time we do not invest in startups outside of the United States.
We invest between $250k and $2 million in seed and series a funding rounds for technology and tech-enabled startups.
We invest in seed and series a financing rounds. We will invest in both equity and debt financing rounds.
Seed financing rounds are generally the first significant funding round for a startup company. Generally, the companies that raise seed funding have developed a business concept into a minimally viable product and have proof points of market interest, but lack significant traction.
A startup may choose to raise a Series A round once they have developed more traction (established revenues, a growing user base or other key milestones). The Series A funding will allow the company to continue to grow at a faster rate than they would be able to otherwise.
For seed we commonly invest in the following instruments:
- Convertible Note – A convertible note is an investment vehicle often used by seed investors investing in startups who wish to delay establishing a valuation for that startup until a later round of funding or milestone. Convertible notes are structured as loans with the intention of converting to equity. The outstanding balance of the loan is automatically converted to equity at a specific milestone, often at the valuation of a later funding round.
- SAFE – A SAFE (simple agreement for future equity) is an agreement between an investor and a company that provides rights to the investor for future equity in the company similar to a warrant, except without determining a specific price per share at the time of the initial investment. The SAFE investor receives the future shares when a priced round of investment or liquidity event occurs.
- Common Stock – Common stock is a security that represents ownership in a corporation. Holders of common stock elect the board of directors and vote on corporate policies. This form of equity ownership typically yields higher rates of return long term. However, in the event of liquidation, common shareholders have rights to a company’s assets only after bondholders, preferred shareholders, and other debtholders are paid in full.
- Preferred Stock – Preferred stock is a security that represents ownership in a corporation. Preferred stockholders have a higher claim to dividends or asset distribution than common stockholders.
We will lead rounds and are comfortable being the only investor in a round or investing alongside others.
For series a rounds we will invest in common or preferred stock. We will also invest in debt and debt-like financings, such as revenue-based financing. Revenue-based financing, also known as royalty-based financing, is a method of raising capital for a business from investors who receive a percentage of the enterprise’s ongoing gross revenues in exchange for the money they invested. In a revenue-based financing investment, investors receive a regular share of the businesses income until a predetermined amount has been paid off, which is typically a multiple of the principal investment.
The modern venture capital industry is based on a “Power Law” investing model. The basis of this model is that each investment a venture capital fund makes must have the capability to return the total amount of the fund.
As a registered investment company we take a different approach. About 75% of our portfolio will be invested in ‘return the fund’ potential startups, and 25% will be invested in startups who have significant growth capability, but are not ‘return the fund’ startups. We have flexibility to invest via debt-like instruments, such as revenue based agreements, which provide startups with growth capital and investors with healthy returns.
Yes, we will lead both seed and series a funding rounds. We are fine with being the only investor in the seed round as well.