Our Investment Criteria

Essex has developed very specific characteristics for its ideal portfolio company which must be satisfied before the expense and effort of due diligence and negotiation can begin:

  • Products and services with international market potential
  • Operating margins that can support rapid growth without massive, ongoing capital demand
  • Asset-to-Revenue ratio of less than 40%
  • Protected intellectual property or other barriers to entry
  • Scalability to meet global demand

These desired characteristics would, for example, exclude a product or service created for a specific market or to take advantage of specific governmental mandates, such as ethanol production subsidies in the US.

Investment Assumptions

Essex also funds companies and ventures that meet its own internal growth strategy:

  • Liquidity events plausible within 3-5 years
  • Liquidity events likely to generate cash returns
  • Valuation increases in the shares of Essex portfolio companies

'Must-Have' Criteria

In order to consider an investment in any target company, Essex has a final set of criteria that must be met before proceeding to term sheet or launching due diligence:

  • Capital requirements in the $250,000 to $2 million CAD range
  • Funding in the form of convertible debentures
  • Incentives such as warrants, buybacks or favorable conversion terms
  • Board seats or board observation rights
  • Access to internal financials, marketing plans and distribution
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