Startups Raising Venture Capital - Due Diligence

She presented the plan to the partners of venture capital. It 'was well received and they offer a term-sheet. We have negotiated a major deal points and are ready for investment. Now the VC wants to start with due diligence.

Wait a minute ... what was all that was present and talk with partners and scientific specialists? It was not that the due diligence? Well, yes, sort of. That was all due diligence to ensure that the business model and technology were worthy of investment. Now they want to make sure that your company is.

Post-sheet due diligence examines the company to a detailed level to make sure there are no skeletons in the closet of the company. The venture capital firm wants to make sure that you are opening up the patent infringement litigation, disputes, or employees, tax scandals.

The VC is usually some form of the following information:

Corporate organization and history - at the bottom of its minute book plus any partnership or joint venture agreements.

Management and employee relations - Management curriculum, descriptions of key personnel, organizational charts, any changes or planned changes in the management

Intellectual property - list of any patents, pending patents, trademarks, copyrights, etc. as well as all claims and litigation by or against the Company's patents and patent infringement.

Financial and accounting - Budget, preferably controlled in the last three to five years, and copies of all documents from the previous financing, share purchase agreements, shareholders agreements, etc.

Legal and tax issues - all claims and litigation by or against the company, including any problems with taxes on income and employment.

The acquisition, transfer, or reorganization - all documentation surrounding the purchase, sale, or reorganization in recent years.

Every venture capital firm will have its own list of demands due diligence. Even early in the process, you might ask the company to its list due diligence in order to get a jump on what the company might want. Often, the list includes additional sections on product plans and sales, competitions, public relations, and R & D.

From the date of receipt of the term sheet to funding will be given six to eight weeks, maybe longer. Once you have committed to receive funding from VC, who will not be sustained because they are trying to identify the documents or make copies .......