Academy Investor Network Overview

What is the Academy Investor Network: We are a diverse team and mission-driven group of U.S. Service Academy Graduates (SAGs) with experience in early stage startups, venture capital, the veteran venture ecosystem and M&A. Our team is solving the problem that many military veterans often face, accessing venture capital funding.

Academy Investor Network Values: Be bold. Be honest. Be humble. Encourage collaboration. Similar to our upbringing in the military, our values are central to everything we do at the Academy Investor Network (AIN). We seek to create an open and transparent environment that promotes collaboration, professionalism and accountability. This environment will enable us to achieve our key missions, i) ensure entrepreneurs that fit within our thesis receive funding, and ii) expose our syndicate members to the venture asset class. For a full breakdown of our values, please see them on our website (https://academyinvestor.com/).

What Does the Academy Investor Network Do: AIN is a for-profit, virtual platform that connects and provides U.S. Service Academy alumni with select venture capital investment opportunities. Alumni from the U.S. Naval Academy (USNA), U.S. Military Academy (USMA), U.S. Air Force Academy (USAFA), U.S. Coast Guard Academy (USCGA), and U.S. Merchant Marine Academy (USMMA) constitute our member network. AIN membership is free, and the only membership requirement is to be a graduate from one of the Service Academies. In addition to exposing AIN members to investment opportunities, our virtual platform encourages collaboration among SAGs to evaluate the merits and considerations of a startup. To that end, and at no cost, AIN provides an educational course on the venture asset class. While AIN is for-profit, we will enable Service Academy alumni foundations and veteran service organizations to participate in the economic upside of our work.

The team that screens and decides which select investment opportunities will be promoted to the platform is led by Sherman Williams and Emily McMahan. Our team, including our advisors, has invested in 100+ early-stage startups to date. We have extensive experience building and investing in the veteran venture ecosystem, as well as investing in Government Tech (GovTech) and Frontier Tech companies.

Who Does AIN Fund. Two categories of companies fit our investment thesis, i) startups led by military veterans in any industry (veterans defined as officers, irrespective of service academy affiliation, and enlisted), and ii) civilian startups within the GovTech space. We will invest at the pre-Seed, Seed and Series-A stages, but we will optimize for investing at the Seed stage. We invest in convertible notes, SAFEs and in priced equity.

The Why for Veteran-led Startups: AIN syndicate members all have significant leadership experience as officers in the military and they appreciate the necessary leadership characteristics, determination, grit, and technical skills one needs while serving. SAGs have developed these skill sets through proprietary experience that is difficult to imitate and that very few people naturally possess. We believe that when assessing early stage companies, possessing these skill sets is the most important factor when making an investment decision. We assess that a collection of SAGs, combined with the expertise of AINs management team, enables us to find the best veterans with the ideas and skill sets necessary to successfully lead an early-stage company. With regard to veteran-led startups that are chosen for the platform, we will optimize for those that are most in-line with our staff’s experience including, Frontier Technology (examples include space technology, artificial intelligence, mobility and autonomous systems, robotics and control systems and augmented and virtual reality), Healthcare Technology, Cybersecurity.

The Why for Civilian-led Startups in the GovTech Space: All SAGs have government service experience by way of the military, or other departments, such as the Coast Guard and Merchant Marines. The U.S. Government spent $4.45 trillion in 2019, and of this amount, approximately $1 trillion was spent on defense, intelligence, and related fields (an example of related fields is that maintenance of the U.S. nuclear arsenal falls under the Department of Energy not the Department of Defense). When choosing which GovTech startups to show syndicate members, we will optimize for those startups selling into i) the Department of Defense, ii) intelligence agencies, iii) municipal police and fire departments, iv) government logistics and v) federal, state and local emergency management organizations (e.g. FEMA). While we require the government to be a major customer, we have a preference for dual-use technology companies, meaning the company sells to both government and non-government customers. By major customer, we mean the government either currently or is expected to account for at least 20% of revenue. While selling to government customers represent long sales cycles, these revenue streams are not as sensitive to boom-bust macroeconomic cycles as are the revenue streams from non-government customers. This revenue resiliency gives GovTech companies a strong revenue anchor during economic downturns. AIN’s management team and syndicate members have a competitive advantage securing allocations into these companies due to our networks’ shared and proprietary government experience and connections.

Why Service Academy Graduates: SAGs represent a unique slice of American talent. This uniqueness is driven by several realities, i) All SAGs receive a STEM-focused undergraduate education, ii) while in military service SAGs operate some of the most complex equipment in the world, iii) SAGs operate this equipment in extremely demanding environments and iv) SAGs do all of this while in leadership positions. Very few other groups in the United States have had work experiences as unique as these former officers, and at AIN we seek to tap into this experience. Currently, no platform exists to leverage the collective wisdom of SAGs in order to diligence venture-backed startups, while offering them the chance to invest.

AIN invests in companies through special purpose vehicles to pool capital, and we accept both accredited and non-accredited investors, when possible. We acknowledge that accepting investments from non-accredited investors is not the norm, but we are comfortable doing so for three reasons: i) we limit investments to the categories / types of founders that we think SAGs have a unique ability to diligence, ii) we are confident our educational resources will help educate SAGs on the risks of venture investing, and iii) exposing SAGs to the venture asset class is core to our mission of reducing the friction points for them to invest in startups and enable entrepreneurs to receive investment.

Why Now? June 2020 is an interesting time to start an early-stage VC platform. Macroeconomic prospects are bleak and until we get either a therapeutic or vaccine for COVID-19, the immediate economic outlook does not look promising. While this environment can give one pause, we believe it is the optimal environment for achieving outsized returns due to low company valuations driven by a slowdown in investment capital and a bleak prospects for near-term liquidity events (M&A activity and IPOs). Also, early-stage venture backed companies consistently outperform other venture categories as well as the public markets and again we believe this will continue to hold true.

Startup Performance During Recessionary Periods: Analysis of the 2008 Great Recession reveals several characteristics of startups that raised during this time.

Pitchbook: Venture Capital in the Great Recession — An exploration of early VC dynamics in and around 2008

The above table illustrates both what we are looking for and the likely difficult realities of the startups that we decide to invest in during this economic crisis. Despite this, we believe that investments in early-stage venture companies will outperform the public markets.

Cambridge Associates LLC September 2019 Venture Capital Index

The above table illustrates early-stage VC fund returns, with few exceptions, outperformed public market indexes during the greatest bull market run in U.S. history. Following this recession, it is highly unlikely the stock market will perform similar to the 2009 to 2020 time frame, and even if it does, historical analysis indicates early-stage venture returns will still outperform.

Early-stage, veteran-led companies with nine or more employees consistently outperform their non-veteran peers. While this list is not exclusive to VC-backed veteran-led companies, it is informative of VC-backed, veteran-led performance. We acknowledge that among this group, veterans significantly under perform at the 1 to 4 employee stage and slightly under perform at the 5 to 9 employee stage. We consider companies with 1 to 9 employees to be at the pre-seed to early seed stage. AIN’s target investment class is seed stage companies that clearly show growth signals (later seed stage). Additionally, we target investment opportunities in Series A companies, that typically have greater than nine employees (or soon will after fundraising). We understand past performance is not indicative of future performance, but we believe veterans of early-stage companies will continue to outperform their non-veteran peers.

Join Us: AIN commits to not only becoming a key player within the veteran venture ecosystem but also to working with other partners to further build out the ecosystem. Whether you are a Service Academy Graduate interested in investing in venture, a veteran seeking capital for a technology-based startup, or a civilian building a company in the GovTech space please contact us (https://academyinvestor.com/), we want to work with you.