This useful post here from Suranga Chandratillake, General Partner at Balderton Capital, lays out for entrepreneurs the various stages of a VC-investment.
No surprise, I find the process followed by business angels networks, like Go-Beyond Investing where I am an active member, not far from it, although our process is probably less rigorous and less scary, especially step 5 which really sounds like a cross-examination in court!
My key take-aways:
- step 1 – Pre-raise: entrepreneurs should spend (some) time with investors before they need or want to raise
- step 2 – Invitation to the process: entrepreneurs activate the investors they already know and seek to deliver a pitch in person
- step 3 – Early process: first series of pitches to the VC-team (1 partner and associates/analysts) followed by internal discussions at the VC to decide on next step
- step 4 – Deep process: the real pitch to another partner in the VC-firm, and lots of detailled questions, but also the opportunity to get to know each other real deep to check the relationship will work for both parties
- step 5 – Partner meeting: final pitch to the entire team and again expect lots of detailled questions and also your chance to check that you can work with the rest of the partner team.
- step 6 – Term sheet: this is the start of the legal process, where intentions are put to paper
- step 7 – Due-diligence: detailled analysis by the legal, accounting, security team, to ensure there is no quirk and all is as presented during the multiple meetings and pitches
- step 8 – Close: finish line for the fund raise process when papers are signed and investment money its the account, and therefore the start of a new step in the start-up development