The Investment Process

A prospective investor will expect to see an Executive Summary or brief Business Plan

This document should try to address the following questions:

• Are you targeting a large and fast-growing market?
• Do you have a compelling value proposition that can address the market opportunity?
• What is the problem your business solves?
• Who are your competitors? Can your company compete with them effectively?
• Do you have a good team that can execute the plan?
• How far will this money take you?
• Do the financials and business model make sense?

After reviewing your plan, the VC will request an initial meeting with you and the key members of your team to discuss your business plan. The quality and ambitions of the people running the business is probably the most important criteria for a VC.

Next steps

The next step in the process is the due diligence stage; where a VC will probably need to conduct the following types of due diligence:

• Commercial: a look at the business environment of the company, market and competition;
• Financial: assessment of the the financial forecasts and assumptions in your business model;
• Technical: a look at the technology of the company is it protected and potentially disruptive;
• People: concerns the background and capabilities of the management team
• Accounting: review of the accounts (after term sheet agreement)
• Legal: looks at legal agreements and legal risks (after term sheet agreement)

If the results from the due diligence are satisfactory, there will be a final presentation to the VC investment team.

Soon after this presentation the VC should be able to issue a Term Sheet and start the legal work before completion of the investment.

Total time from the initial meeting to completion should take 3-5 months. It might be shorter or longer than this, depending on the complexity of the transaction and the amount of due diligence needed before an investment is made in the business.