Discover the comprehensive workflow guiding late-stage VC Pre-IPO readiness, covering analysis, validation, legal compliance, agreement finalization, and exit planning.
1
Analyze the business model to ensure robust and profitable
2
Undertake extensive financial analysis of balance sheet, income Statement and cash flow
3
Validate the market size, opportunity and competition
4
Review investment thesis including risk factors
5
Conduct due diligence on executive team
6
Check compliance with legal and regulatory requirements
7
Ensure financial projections and budgets are realistic
8
Verify IP ownership and patent portfolio
9
Assess company’s scalability potential
10
Approval: Financial Director on Investment Budget
11
Evaluate current company’s valuation
12
Structure the deal including term sheet
13
Negotiate overall deal terms and conditions
14
Draft agreement with the help of legal team
15
Approval: Legal Counsel on Agreement
16
Finalize and sign the agreement
17
Allocate the funds as per agreement
18
Monitor post-investment company performance
19
Implement governance measures
20
Plan for exit strategies
Analyze the business model to ensure robust and profitable
Examine the company's business model to ensure its strength and profitability. How does the business generate revenue, and what strategies does it have in place to sustain growth? Assess the viability of the business model in the long term. Identify any areas that require improvement or optimization to maximize profitability and competitiveness. Use your analytical skills to identify potential risks and devise strategies to mitigate them. Resources or tools required include financial statements, market research data, and industry analysis.
1
Subscription-based
2
E-commerce
3
Marketplace
4
Advertising
5
Software as a Service (SaaS)
Undertake extensive financial analysis of balance sheet, income Statement and cash flow
Perform a thorough analysis of the company's financial statements, including the balance sheet, income statement, and cash flow statement. Evaluate the financial health of the business, identifying any areas of concern such as liquidity, profitability, and solvency. Interpret the financial ratios to assess the company's financial performance and compare it with industry benchmarks. Use your expertise in financial analysis to identify any potential red flags or areas requiring improvement. Excel or other financial analysis tools are recommended for this task.
Validate the market size, opportunity and competition
Validate the market size, opportunities, and competitive landscape of the industry the company operates in. Conduct market research to understand the target market, its size, growth potential, and trends. Identify the company's unique selling proposition and its competitive advantages. Analyze the competitive landscape to identify key competitors and their market share. Assess the attractiveness of the market and the company's positioning within it. Use market research reports, industry analysis, and competitive intelligence tools to gather relevant data and insights.
Review investment thesis including risk factors
Review the investment thesis for the late-stage venture capital investment. Understand the rationale behind the investment and the expected return on investment. Identify the risk factors associated with the investment, such as market risks, regulatory risks, and operational risks. Assess the mitigating factors put in place to manage these risks. Evaluate the alignment of the investment thesis with the overall investment strategy and objectives. Discuss and document potential risk mitigation strategies.
1
Market risks
2
Regulatory risks
3
Operational risks
4
Financial risks
5
Technological risks
Conduct due diligence on executive team
Perform a comprehensive due diligence review of the executive team of the target company. Assess the qualifications, skills, and experience of key executives, such as the CEO, CFO, and other C-level executives. Verify their track record and suitability for leading the company towards its growth objectives. Evaluate the team's ability to execute the business plan and navigate challenges. Conduct reference checks and interviews with key executives to gather additional insights. Use due diligence checklists, reference templates, and interview guides to streamline the process.
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CEO
2
CFO
3
CTO
4
CMO
5
COO
Check compliance with legal and regulatory requirements
Ensure that the target company is in compliance with all relevant legal and regulatory requirements. Review corporate governance practices, board composition, and adherence to industry-specific regulations. Identify any legal or compliance issues that may pose a risk to the investment. Engage legal experts or compliance officers to provide guidance and support during the due diligence process. Verify the existence of necessary licenses, permits, and certifications. Assess the company's policies and procedures related to data protection, intellectual property, and employee relations.
Ensure financial projections and budgets are realistic
Evaluate the financial projections and budgets provided by the target company. Assess the reasonableness and achievability of revenue forecasts, expense projections, and cash flow expectations. Identify any assumptions or risks that may impact the accuracy of the financial projections. Validate the alignment of the financial forecasts with the company's business model and market conditions. Analyze the sensitivity of the financial projections to key variables. Use financial modeling tools and industry benchmarks for comparison and analysis.
1
Revenue growth rate
2
Cost of goods sold (COGS)
3
Operating expenses
4
Working capital requirements
5
Discount rate
Verify IP ownership and patent portfolio
Verify the ownership of intellectual property (IP) assets by conducting a thorough review of patents, trademarks, copyrights, and trade secrets held by the target company. Assess the strength, value, and enforceability of the IP assets. Identify any legal disputes or challenges regarding IP rights. Evaluate the company's IP strategy and its ability to protect and monetize its IP assets. Engage IP lawyers or experts to provide guidance and opinion on IP matters. Ensure that the company has proper documentation and processes in place to protect its IP assets.
Assess company’s scalability potential
Evaluate the scalability potential of the target company. Assess its ability to grow its operations, customer base, and revenue without significantly increasing costs or diminishing profitability. Identify any barriers to scalability, such as operational constraints or market saturation. Evaluate the scalability potential of the company's technology infrastructure, distribution channels, and customer acquisition strategies. Analyze the scalability track record of similar companies in the industry. Consider market trends and future growth prospects to assess the company's long-term scalability potential.
1
Operational constraints
2
Market saturation
3
Limited distribution channels
4
Intense competition
5
Lack of customer demand
Approval: Financial Director on Investment Budget
Will be submitted for approval:
Undertake extensive financial analysis of balance sheet, income Statement and cash flow
Will be submitted
Validate the market size, opportunity and competition
Will be submitted
Review investment thesis including risk factors
Will be submitted
Conduct due diligence on executive team
Will be submitted
Check compliance with legal and regulatory requirements
Will be submitted
Ensure financial projections and budgets are realistic
Will be submitted
Verify IP ownership and patent portfolio
Will be submitted
Assess company’s scalability potential
Will be submitted
Evaluate current company’s valuation
Evaluate the current valuation of the target company. Analyze its financial performance, growth prospects, and comparable transactions in the industry. Assess the market value of the company's equity and any preferred share classes. Consider the company's intellectual property, customer base, revenue streams, and competitive advantages in the valuation process. Engage valuation experts or investment bankers to provide an unbiased opinion on the company's value. Conduct sensitivity analysis to understand the impact of different valuation assumptions on the investment decision.
Structure the deal including term sheet
Structure the deal terms and conditions for the late-stage venture capital investment. Define the investment amount, ownership percentage, and any preferential rights or protections. Draft a term sheet outlining the key terms of the investment agreement. Consider the desired exit strategy and its implications on the deal structure. Collaborate with legal and financial experts to ensure the deal structure aligns with legal requirements and industry best practices. Discuss and document any specific deal protections or contingencies.
Negotiate overall deal terms and conditions
Engage in negotiations with the target company's management team and shareholders to finalize the deal terms and conditions. Collaborate with legal advisors and financial experts to ensure the negotiation process aligns with industry standards and best practices. Identify potential areas of negotiation, such as valuation, investor rights, governance, or exit strategy. Negotiate with the aim of achieving a mutually beneficial outcome while protecting the interests of the investor. Document the agreed-upon deal terms and conditions in the investment agreement.
Draft agreement with the help of legal team
Draft the investment agreement with the assistance of the legal team. Ensure that all key deal terms and conditions, such as investment amount, ownership percentage, and investor rights, are clearly outlined and legally binding. Include provisions for dispute resolution, confidentiality, and any specific requirements unique to the investment agreement. Collaborate with legal advisors to address any legal or regulatory considerations. Ensure that the agreement aligns with the overall deal structure and objectives of the investment.
Approval: Legal Counsel on Agreement
Will be submitted for approval:
Structure the deal including term sheet
Will be submitted
Negotiate overall deal terms and conditions
Will be submitted
Draft agreement with the help of legal team
Will be submitted
Finalize and sign the agreement
Review the drafted investment agreement with the legal team and the target company's management team. Address any outstanding issues or concerns before finalizing the agreement. Obtain approvals and signatures from all parties involved in the investment. Ensure that all necessary legal and regulatory requirements are met for a valid and enforceable agreement. Store the signed agreement securely and distribute copies to all relevant parties. Maintain a record of the final agreement for future reference or audit purposes.
Allocate the funds as per agreement
Allocate the invested funds to the target company according to the terms of the investment agreement. Ensure that the agreed-upon investment amount is transferred to the target company's designated bank account. Monitor the fund allocation process to ensure compliance with legal and regulatory requirements. Collaborate with financial experts or investment professionals to facilitate the fund transfer securely and efficiently. Keep accurate records of the fund allocation process for future reference or auditing purposes.
Monitor post-investment company performance
Monitor the performance of the target company after the investment has been made. Track key performance indicators (KPIs) and financial metrics to evaluate the company's progress towards its growth objectives. Conduct regular performance reviews with the company's management team to discuss achievements, challenges, and potential areas for improvement. Provide guidance and support to address any issues or roadblocks hindering the company's performance. Collaborate with financial experts and industry advisors to assess the impact of external factors on the company's performance.
1
Revenue growth
2
Profit margin
3
Customer acquisition rate
4
Market share
5
Return on investment (ROI)
Implement governance measures
Implement governance measures to ensure effective oversight of the target company's operations and decision-making processes. Define the roles and responsibilities of the board of directors, committees, and management team. Establish reporting mechanisms and communication channels between the investor and the target company. Monitor compliance with corporate governance best practices and regulatory requirements. Collaborate with legal advisors to draft governance documents, such as bylaws and corporate policies. Consider the specific governance needs and requirements of the target company and its industry.
1
Board composition
2
Committee structure
3
Reporting requirements
4
Decision-making processes
5
Disclosure policies
Plan for exit strategies
Develop and execute a comprehensive exit strategy for the late-stage venture capital investment. Assess potential exit options, such as initial public offering (IPO), strategic acquisition, or secondary sale. Evaluate the optimal timing and conditions for each exit strategy. Determine the target valuation or return on investment for the exit. Collaborate with financial experts or investment bankers to evaluate and execute the chosen exit strategy. Monitor market conditions and industry trends to maximize the potential return on investment.
