In the early days, a company may not own all of the intellectual property (IP) created for the company by its founders, initial employees or contractors.
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It may not be exactly what your investors ask for, but it will almost certainly cover substantially the same areas and requests, and by being on the front foot you can try to avoid investors even needing to send their full "blanket" request lists.
If you need guidance on what documents to pull together, ask a lawyer or investor for a sample legal due diligence questionnaire. You will also have the chance to identify and address or explain any gaps or issues before you get too far down the track with the investors (at which point those sorts of issues tend to be more disruptive). You will be in a great position to make your information available quickly when the process kicks off (ideally at that point through a secure virtual data room or, alternatively, via a cloud hosting site). If you can pull this together early, you will be ahead of the game when the investors send you their due diligence request lists. This should include, among other things, all of your incorporation and constitutional documents your annual and management accounts and cash flow forecasts tax computations (if any) key commercial contracts intellectual property licences or assignments (including any development agreements) employment contracts real estate leases or licences and insurance policy summaries. They will also want to check there are no skeletons in the closet, which would mean the business is not worth as much as the pre-money valuation you have initially agreed with them.Īs part of that process, you will need to disclose a fair amount of information about your business, including all of your key financial, legal and commercial documents so you should be organised and prepared ahead of time.īefore you even begin talking to investors, start to collect copies of your principal documents and organise them in a clear, logical folder system. They need to satisfy themselves that your business matches your initial description and valuation aspirations. Due diligenceĪs part of the fundraising process, your investors will almost certainly do some due diligence on your business. So how do you avoid these issues and make your deal run as smoothly as possible? 1. Venture capital funds (VCs) will give your business a thorough assessment before they invest and you may end up finding that you are less prepared for the process than you thought you were.Īs advisors to a range of companies seeking VC investment, we see the same issues crop up time and time again as founders seek investment before they have got their houses in order. " FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California.Preparing for and going through a venture capital fundraising for the first time can be tough. " SVB Financial Group Announces Proposed Offerings of Common Stock and Mandatory Convertible Preferred Stock."įDIC. " Starbucks Commits $100 Million as Cornerstone Investor in Valor Siren Ventures I." " Intel Capital Invests $132 Million in 11 Disruptive Technology Startups." " H.R.4242 - Economic Recovery Tax Act of 1981." 209, The ERISA Improvements Act of 1979: Summary and Analysis of Consideration,". " Report to Congress on the Capital Gains Tax Reductions of 1978," Page i. " Pitchbook-NVCA Venture Monitor Q4 2022."
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" Pitchbook-NVCA Venture Monitor Q4 2022," Download Excel Spreadsheet, Select "Deals x Region." " The Rise and Fall of Venture Capital,". " Venture Capital’s Role in Financing Innovation: What We Know and How Much We Still Need to Learn," Pages 238-244.
" Welcome to the Unicorn Club: Learning from Billion-Dollar Startups."Īmerican Economics Association. " Venture Capital in the Great Recession."
"Organizing Venture Capital: The Rise and Demise of American Research & Development Corporation, 1946–1973,". University of Pennsylvania, Wharton Faculty Research. World Intellectual Property Organization, " Global Innovation Index 2022," Pages 32-33. " The Rise and Fall of Venture Capital," Pages 5-8.
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