Brief introduction to VCIE

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Brief introduction to VCIE

  1. 1. Guidance on Composition of Venture Capital Investment Enterprise (VCIE) Business Plan September 20, 2002 Executive Summary (such as origin, purpose and content of plan) 1. Brief introduction to VCIE (1) Name of VCIE. (2) Chart showing organizational structure (including planned choices of president/chairman and CEO). (3) Registered capital and paid-in capital. (4) VCIE’s shareholding structure (names of shareholders who have provided letters of intent to invest, and the amounts of their investment, which must constitute at least 20 percent of the proposed paid-in capital). (5) The VICE’s planned number of directors and supervisors, and the method of BOD review and approval of investment cases (e.g., the threshold for passing resolutions on investment cases, and other matters). (6) Other. 2. Operating Strategy (1) Operating mode (a) Entrusted management or self-management. (b) Main tasks to be undertaken by management firm. (c) VCIE’s investment procedure. (d) If there is to be an investment review committee or similar entity, its structure, membership, and resolution-making mode. (e) The investment case decision-making procedure: Sourcing of cases, due diligence, explanatory meeting and/or review meeting re the investment, VC company board meeting (written review or review in meeting). (f) How many working days prior to a meeting must the agenda of a board meeting and a shareholders’ meeting be delivered. (g) How many working days prior to the deadline of a written review must information for the review be delivered (if there is a mechanism for written review). (h) Other (whether or not there is an “authorization limit” mechanism). 1
  2. 2. (2) Entrusted management and related conditions (a) Term of entrustment (b) Management fee: 1. Method of calculation 2. Time of payment (c) Performance bonus 1. Method of calculation 2. Time of payment (d) Relevant obligations of management company (e) Main terms and conditions of management entrustment contract (f) Other 3. Investment Strategy (1) Investment areas (investment ratios). (2) Projected investment ratios for each investment stage (seed stage, startup stage, expansion stage, and mezzanine stage). (Please clearly indicate in the business plan that the meanings of seed stage, startup stage, expansion stage, and mezzanine stage accord with the definitions of the Taiwan Private Equity & Venture Capital Association.). (3) Targeted investment industries (investment ratios). (4) Each targeted investment industry and its products (Attachment 1). (5) Principles of investment in single enterprises: (a) As ratio of VCIE’s paid-in capital. (b) As ratio of paid-in capital of investee company (whether or not this will vary according to the investment stage of the investee company). (6) Principles of investment in other VCIEs (ratio of paid-in capital of each invested VCIE, and what ratio of capital raised is to be invested in domestic/foreign VCIEs) and rationale. (If no investment in other VCIEs, this must also be explained.) (7) How the amount of new investments is to be distributed between newly established and already established VCIEs. (8) Principles of newly established VCIE investment in investment target companies of already established VCIE(s) (or its reason and necessity) and investment ratio. (9) Amount of purchase of old stock of investee’s original stockholders as a ratio of VCIE’s paid-in capital, and its reason or necessity. (10) When the management company or a principle stockholder of the VCIE has an “interested party relationship” with a company that is an investment target of the VCIE, 2
  3. 3. please explain, respectively in the case of each, how this is handled and what is the threshold for passing review by the VCIE’s board of directors. For the purposes of the foregoing, “interested party relationship” is defined as follows: (a) There is an interested party relationship between a VCIE’s prospective portfolio company and the VCIE’s management firm where: (i) the management consulting firm or any of its directors, supervisors, managers, shareholders, or employees (including the spouses and first-degree relatives of the above) holds 10% or above of the prospective portfolio company's shares; (ii) the management consulting firm or any of its directors, supervisors, managers, shareholders, or employees (including the spouses and first-degree relatives of the above) is a director, supervisor, or manager of the prospective portfolio company; but this restriction does not apply if the person in question holds the position of director, supervisor or manager for reason connected with the VCIE's investment. (b) There is an interested party relationship between a VCIE’s prospective portfolio company and a principle stockholder of the VCIE where: (i) a director, supervisor, or shareholder of the VCIE (including the spouses and first-degree relatives of the above) holds 10% or above of the prospective portfolio company's shares; or (ii) a director, supervisor, or shareholder of the VCIE (including the spouses and first- degree relatives of the above) is a director, supervisor, or manager of the prospective portfolio company; but this restriction does not apply if the person in question holds the position of director, supervisor or manager for reason connected with the VCIE's investment. (11) Sources of investment cases (Attachment 2). (12) Investment case evaluation: (a) Criteria of investment case feasibility analysis, and a brief description of the content thereof. (b) Criteria for evaluating the reasonability of the subscription price, and a brief description of the content thereof. (c) The main substance of checking and approval of investment term sheets and purchase agreements. (13) Post-investment management: (a) How post-investment management of and assistance for portfolio companies is conducted; (b) When are the VCIE’s quarterly reports furnished to VCIE stockholders, and what are the main items included in the quarterly reports; (c) What are the principles for portfolio company valuation and investment loss provision. (14) Divestment of stockholding: Method, strategy, price consideration, etc. 3
  4. 4. (15) Other (e.g., whether or not VCIE stockholders, the management firm, or members of the management firm have co-investment rights). 4. Analysis of the Management Firm’s Organizational Structure and Management Team (1) The management firm’s organizational structure (a) Brief introduction (date and location of establishment; main shareholders; responsible officer; president/chairman, directors and supervisors). (b) Fund management company’s organizational structure: CEO, and allocation, duties and names of personnel in investment department, management department and finance department. (c) Scale of fund under management. (2) Management team members and consultants and technical advisers (Attachments 3 and 4). (If there are no consultants or technical advisers, Attachment 4 need not be filled out.) (3) The historic investment record of each member of the management team (Attachment 5). (4) Details of investment portfolios of VCIEs under the firm’s management as of the most recent quarter (Attachment 6). (Please fill out a separate form for each VCIE, and then provide an aggregation.) (5) Summary of results of VCIEs under management (Attachment 7). (Please fill out separately for each VCIE.) (6) In respect of VCIEs under management, as of the most recent quarter, the investment performance of stocks disposed of (including full disposal and partial disposal). (Please decide content for yourself.) (7) Details of individual stocks still held in investment portfolios of VCIEs under management, as of the most recent quarter. (You may decide for yourself what content to provide, such as company names, investment dates, main business operations, other matters.) (8) Other. 5. Analysis of Finances and Investment Benefit (1) Investment portfolio plan (including yearly projections for: investment cost; sale volume, sale cost, and gain on sale; write-off cost). (2) Basic financial assumptions: 4
  5. 5. (a) Main basic assumptions (e.g., projected interest income, projected failure rate of investments, projected profit multiple on disposals, income tax rate, office setup costs, etc.). (b) Projected income statement. (c) Projected balance sheet. (d) Projected cash-flow statement. (3) Analysis of return on investment: projected shareholder IRR as per cash flow. (4) Other. 6. Technology Transfer (1) Technology transfers previously carried out by the management company or management team (Attachment 8~1). (2) The management company’s or VCIE’s concrete, feasible plans for the future concerning technology transfer (Attachment 8~2). (3) Other. 7. Analysis of the VCIE’s Risk 8. Other Matters 5
  6. 6. Targeted Investment Industry Products Invested Investment Products Industry Ratio < Attach m e n t 1 > 6
  7. 7. Investment Sourcing Channels (Ranked in order of number of investments sourced) Projected number of Investment investments sourced Sourcing Main reasons for being able to depend on this source per year (as per past Channel experience) Domestic and overseas VC sector Consultancies Previously invested companies Academia (laboratories) Incubators VCIE stockholders Industry Own development 7
  8. 8. Other < Attach m e n t 2 > CV Data of Main Management Personnel of Limited Liability Company (Entrusted Management Company) Name: Job title: Date of birth (year/month/day): Address: 1. Academic history: (Please fill in details as below for university and above) Dates of Name of school Department Degree Comments attendance (year/ month) ~ Doctoral ~ Master’s ~ Bachelor’s 2. Experience: (Please fill in details as below for positions currently and previously held) Dates of Name of company Title of position Work content employment (year/ month) Fill out with ~to date management company here ~ ~ ~ 3. Specializations: (Please describe industrial fields and specialized skills) 4. Investment management experience: (1) Holding of investments or management of VCIE or technology enterprise with actual worth of NT$ _____ million, and number of individual cases cumulatively totaling ______. (2) Specific examples of participation in investment management and results. 5. Declaration: I hereby declare that no venture capital investment enterprise has ever violated the self- discipline agreement of the Taiwan Private Equity and Venture Capital Association as a result of my acts, and that the above-described and all of the information in this form is true and correct. Declarant: (please sign in own hand) Date: 8
  9. 9. <Attachment 3> Consulting (Technical) Advisers Whether has signed Main academic Areas of agreement Name Main role history specialization of intent to serve as adviser 9
  10. 10. <Attachment 4> Investment Record of Management Team Members Base date (year/month/day): __________________ Position in Job company at time Investment cost Realized gain or loss Name of invested Year of responsibilities of investment (or (in thousands of NT dollars) (in thousands of NT dollars) enterprise investment re investment post-investment case (see note) management) Total Note: Job responsibilities re investment: Investment appraisal (1a: At the time of this investment, held position in company that acted as lead investor; 1b: At the time of this investment, held position in company that acted as co-investor); post-investment management (2); supervisory mid-level management (3); supervisory upper- level management (4); other (5). [More than one may be selected.] 10
  11. 11. <Attachment 5> Breakdown of Investees by Industry, Investment Stage and Location at Time of Initial Investment 1. All investment cases from first year for which quarterly data available (year: ________) to the most recent quarter (year/month: ____________) Base date: most recent quarter (year/month: ____________) Number of Ratio Amount of Ratio companies (%) investment( (%) invested NTD) Information Industry Internet sectors of Electronic parts investees (for Semiconductors biotechnolog Communications y High-grade materials investments, Specialty chemicals & pharmaceuticals please precisely Aerospace specify Biotechnology relevant Venture capital investment industry Other segment) Total Seed stage Startup stage Investment stages Expansion stage Mezzanine stage Taiwan Location North America Other 2. Investments still Held as of Most Recent Quarter [The form is the same as that above.] 11
  12. 12. < Atta c h m e n t 6 > Operating Performance of Management Company (If overseas VCIE, please make own adjustments to the form below as appropriate.) Base date: Most recent quarter; Unit: NT$ millions (except EPS) Name of VCIE or other investment enterprise Date of incorporation/registration Paid-in capital Number of investments still held Estimated market value of investments still held Book cash and cash equivalent positions Current year EPS (as of ____ quarter) Number of companies already listed (on exchange or OTC), and their names Number of companies to be listed (on exchange or OTC) within one year, and their names(must be verifiable) Paid-in capital at year-end 5th last year Realized capital gains: companies and amounts After-tax EPS (see note) Provision for investment loss: companies and amounts Paid-in capital at year-end 4th last year Realized capital gains: companies and amounts After-tax EPS (see note) Provision for investment loss: companies and amounts Paid-in capital at year-end 3rd last Realized capital gains: companies and amounts After-tax EPS (see note) Provision for investment loss: companies and amounts Paid-in capital at year-end 2nd last year Realized capital gains: companies and amounts After-tax EPS (see note) Provision for investment loss: companies and amounts Paid-in capital at year-end Last year Realized capital gains: companies and amounts After-tax EPS (see note) Provision for investment loss: companies and amounts 12
  13. 13. Ten largest shareholders Note: For overseas VCIES, please insert after-tax profit or loss. <Attachment 7> Technology Transfer Past technology transfers carried out by the management company or management team include: Brief description of Name of nature of technology Benefits of technology transfer case transfer 13
  14. 14. <Attachment 8~1> The management company’s or VCIE’s concrete, feasible future plans re technology transfer are briefly described as follows: Plan and content Specific mode of Anticipated benefits implementation 14
  15. 15. <Attachment 8~2> 15

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