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PREPARING

FORTHE VC

VENTURE CAPITAL: 3

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PREPARING FOR THE VC

NEEDs:

1. Preparation of documents2. Subsequent negotiation

3. Structuring the deal

4. Required Overall Skills

TO MEET THE NEEDs:

1. Buy/HIRE experienced Professionals

2. Buy Requisite Skills

AIM:

1. Final Legal closure

2. To Reach the Goal of getting Venture Funding

Spectacular Achievement is Always preceded by

Spectacular Preparation- Robert H. Schuller

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PREPARING FOR THE VC:REQUIREMENT

1. Hiring Advisers

2. Doing an Internal Review of ventures business.3. Doing a growth Audit

4. Determining the Strategic Direction of ventures business

5. Building ventures Board of Directors and Advisory Board6. Understanding Ownership, Dilution and Rounds of

Financing

7. Determining the Valuation of your Business for VC

Funding

8. Forming Business Plan

9. Determining Funding Plan

10. Shaping Elevator Pitch and VC Presentation

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HIRING ADVISERS

Types of Advisers:

1. A VC intermediary who possesses

corporate finance skills.

2. A firm of Chartered Accountants.

3. A firm of solicitorsfor legal advice.

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VC intermediarys tasks

1. Lead Adviser to the VC fund

2. Explain and advise the management on the whole process3. Develop , advise and execute strategies

4. Dopre due diligence review

5. Arrive at a valuation & equity percentage to be offered to VC.

6. Review the financial forecasts & statement of funding

7. Preparation and review of thebusiness plan/Executive Summary etc8. Assistmanagement team in preparing Presentation

9. Make a list of selected VCs, likely to be interested in funding

10. Develop & execute negotiating strategy

11. Arranging meetings & to assist management in presenting to VC.12. Assisting management in term sheet negotiation.

13. Manage the issues that come out in due diligence process of VC.

14. Assist management in negotiating the final legal agreement.

15. Assist for regulatory/Statutory amendment as required by VC.

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BENEFITS FROM VC INTERMEDIARY

Experienced in negotiatingbusiness terms including price , non-

competition covenants,deal structure , payment terms, managementcontracts , security etc.

Help to maximize the value of business and to facilitate to get VC

money at thebest term.

Develop a focused business plan including the timing in raising

capital. Improve chances of obtaining VC fund leaving management in

concentrating in business growth.

Help in Good Cop, Bad Copnegotiating process.

Help in answering sensitive & critical issues like valuation of yourbusiness , VCsshareholding , Share Allocation to ESOP , Founder

Compensation, Decision making powers post VC investment etc.

Can put together a reliable and cohesive team of advisers to ensure

the deal gets done as quickly and efficiently as possible.

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Dos & Donts : VC INTERMEDIARY

Dos:

1. Letter of Engagement with clarity about his work profile2. Involve at the initial stage with a confidentiality agreement.

3. Project Plan- time table for each deliverable

4. Intermediary is the nodal point & drive the deal till completion

5. Be open & honest as he needs all information to protect interest

6. Structure his payment terms Fixed plus Success Fee to carry the

process till the end

Donts:

1. Ignore advice on the business plan & while negotiating with the VC.

2. Treat him as an outsider, instead, share concerns & aspirations.

3. Keep secrets from him, if problem occurs ,let him know

4. Ventures, if capable, would able to get correct advice andbetter

negotiationtips from him as & when required.

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PREPARING FOR VC: CAs Role

1. Create the Financial forecasts of the business.

2. Determine the funding needs in conjunction with venturesteam

3. Develop a business Plan with the inputs from ventures team

4. Do a limited review of businesss systems , policies and

process and exhibit weakness needs corrections

5. Conduct a secretarial audit and ensure that records like

shareholder minutes, board minutes , statutory registers,

employment records of directors and key employees etc are

properly maintained

6. Review the tax return, assessment orders, tax demands raised

by revenue authorities to identify and quantify the financial

risks & impact thereof in financial forecast

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PREPARING For VC: Legal Advisers' Role

1. Term Sheet

2. Investment Agreement3. Shareholders Agreement

4. Service Contracts for Directors and key employees

5. Other legal Documents like IPR licensing agreement etc

6. Changes, if any, in Memorandum & Articles of Association,reflecting the terms of the investment agreement

7. Board & Shareholder minutes relating to the issue of securities,

appointment of directors and the resignation of existing directors

8. Permission and filing on the issue of shares to the VC & theappointment of Directors

9. Manage any other issues which create legal risk and exposure for

business

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VENTURE C PIT L

GOOD WISHES

TO ALL