Translate my blog

Monday 24 July 2017

Anatomy of an Angel Investing Pitch session and meeting: Part III The Devil in the detail: Due diligence (documentation and legals)

In terms of garnering immediate interest to engage investors in the due diligence leading to placement of actual funds (after the documentation is complete, Shareholder Agreements signed etc), there is some element of a binary process going on that isn't always justified by the eventual end result at exit. The hot ticket business which has 80% of the room signed up to and quickly mentally filling its allocation and (on the other side) the 'jane-no-mates' scrabbling for interest may be following on direct from one another in the running order. 

The beginning of what can be an incredibly searching due diligence process begins there and then in the pitching room. First questions come direct to the founder, immediately after the pitch itself: Where are your revenue projections from, why such a high valuation, who in your team is the marketer? 

This process continues amongst the investors with the business founder and/or team members no longer in the room (perhaps waiting and wondering next door), as the degree of interest in the room and immediate issues are rapidly unveiled amongst the potential investor group and therefore quite quickly apparent to all and sundry. At that point one investor may likely be asked or offer (based on previous sectoral experience or investment) to be a co-ordinator for the round or rather lead 'cat-herder' of what can often be a geographically dispersed and very busy group of angel investors.



If it's a follow-on round with the group, including previous investors, the status of existing group investors in the business and their opinion can be highly significant in coalescing and heightening collective interest in the round, at least if they remain positive about the business's trajectory and especially if they are also themselves following on again in this round.

After all is said and done, expressions of immediate interest to join the due diligence process in subsequent days, weeks and sometimes months via group communications over Doodle, Skype, or PowWowNow are logged and everyone can get down to the remainder of the evening's fun of networking, swapping business and investing war stories, recent holiday experiences and all the other subjects that like-minded, and entrepreneurial folks on both sides of the investing equation as investors or early stage founders and co-founders love to share with one another. 

Many cross the divide either way on multiple occasions.

Join our exclusive FREE subscriber list on www.askanangel.com!



Follow me on Twitter on @ask1angel

No comments:

Post a Comment