Due Diligence-Deal Quality Shopped Deal Quality of the Customers/ Partners Quality of the Origin Quality of the Acct Firm ...
Investment Compatibility  <ul><li>Market Space-does it fit </li></ul><ul><li>Portfolio Compatibility </li></ul><ul><li>Inv...
Management Due Diligence <ul><li>Quality of the Management Resources </li></ul><ul><li>Quality of the Team </li></ul><ul><...
Characteristics of Team <ul><li>Quality People </li></ul><ul><li>Integrity </li></ul><ul><li>Intellectual Honesty </li></u...
Background <ul><li>Was he COO, Senior Mgt, VP </li></ul><ul><li>Rank VPs budget sizes </li></ul><ul><li>Who on the team re...
Knock-Outs <ul><li>Is this the guy to overcome obstacles? </li></ul><ul><li>Will he step down for new CEO </li></ul><ul><l...
Product Type <ul><li>Evolutionary or Revolutionary </li></ul><ul><li>Timing </li></ul><ul><li>Does it work </li></ul><ul><...
Intangibles <ul><li>Focus </li></ul><ul><li>Momentum </li></ul><ul><li>Buzz </li></ul><ul><li>Gut Feeling </li></ul><ul><l...
Financial <ul><li>Performa </li></ul><ul><li>Burn Rate </li></ul><ul><li>Past Financings </li></ul><ul><li>Proceeds </li><...
Valuation &/ Discounts <ul><li>Entrepreneur's Background- was he COO, Rank VP, Management Risk then is 2% to 20%/yr discou...
Lets do some background.  We first must look at the market, measurements, opportunities, and outlook.  Healthcare technolo...
Angels must look at the market opportunity, endgame, barriers to entry, revenue models, success factors, future outlook an...
1.         Biotech (genomics, proteomics, platform/drug delivery, medical devices & therapies/treatments)  2.         Agri...
Thank You Rick Holdren 832-755-7877 [email_address]
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Due Diligence Deal Quality

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Due Diligence Deal Quality

  1. 1. Due Diligence-Deal Quality Shopped Deal Quality of the Customers/ Partners Quality of the Origin Quality of the Acct Firm Quality of the Legal Council Quality of the Other Equity Investors Quality of the Business Plan Quality of the Source
  2. 2. Investment Compatibility <ul><li>Market Space-does it fit </li></ul><ul><li>Portfolio Compatibility </li></ul><ul><li>Investment Amt Compatibility </li></ul><ul><li>Geographic Compatibility </li></ul><ul><li>Personal Compatibility </li></ul><ul><li>Harvest Strategy Compatibility </li></ul>
  3. 3. Management Due Diligence <ul><li>Quality of the Management Resources </li></ul><ul><li>Quality of the Team </li></ul><ul><li>Completeness of the Management Team </li></ul><ul><li>Adult Supervision </li></ul><ul><li>Diversity and Efficacy </li></ul><ul><li>Past Successes </li></ul><ul><li>Commitment </li></ul>
  4. 4. Characteristics of Team <ul><li>Quality People </li></ul><ul><li>Integrity </li></ul><ul><li>Intellectual Honesty </li></ul><ul><li>Intellectual Brilliance </li></ul><ul><li>People Smarts </li></ul><ul><li>Real entrepreneurs </li></ul><ul><li>Driven Intensity </li></ul><ul><li>Bold Self-Confidence </li></ul><ul><li>Vision & Ability Execute </li></ul><ul><li>Ability to Solve Problems </li></ul><ul><li>Adaptability </li></ul><ul><li>Uses Resources well </li></ul>
  5. 5. Background <ul><li>Was he COO, Senior Mgt, VP </li></ul><ul><li>Rank VPs budget sizes </li></ul><ul><li>Who on the team really built something </li></ul><ul><li>Or took sales 10M-100M? </li></ul><ul><li>Rank Mkt Growth-cost 1 st 4 customers </li></ul><ul><li>Costs next 40 customers </li></ul><ul><li>Strategic partners, new cust, tech, mkts </li></ul>
  6. 6. Knock-Outs <ul><li>Is this the guy to overcome obstacles? </li></ul><ul><li>Will he step down for new CEO </li></ul><ul><li>Offer balanced equity for assoc? </li></ul><ul><li>Market Characteristics, Growth Rate, Accept new entrants, technologies </li></ul><ul><li>Strategic Partner skills </li></ul><ul><li>IP- who defines strategy </li></ul><ul><li>Board, seed investors, </li></ul>
  7. 7. Product Type <ul><li>Evolutionary or Revolutionary </li></ul><ul><li>Timing </li></ul><ul><li>Does it work </li></ul><ul><li>Innovation </li></ul><ul><li>Smarts </li></ul><ul><li>Pain </li></ul><ul><li>Business Model </li></ul><ul><li>Markets & Customers </li></ul><ul><li>Products & Services </li></ul><ul><li>Distribution Channels </li></ul><ul><li>Financial Engine </li></ul><ul><li>Competitive now/future </li></ul><ul><li>Proprietary Advantage </li></ul>
  8. 8. Intangibles <ul><li>Focus </li></ul><ul><li>Momentum </li></ul><ul><li>Buzz </li></ul><ul><li>Gut Feeling </li></ul><ul><li>Existing Pre Approval </li></ul><ul><li>Antidilution </li></ul><ul><li>Security </li></ul><ul><li>Conversion Rights </li></ul><ul><li>Board Rights </li></ul><ul><li>Legal </li></ul><ul><li>Form </li></ul><ul><li>Tax </li></ul><ul><li>Litigation </li></ul><ul><li>IP Integrity </li></ul><ul><li>Copyrights </li></ul><ul><li>Trade Secrets </li></ul><ul><li>Non Competition Doc </li></ul>
  9. 9. Financial <ul><li>Performa </li></ul><ul><li>Burn Rate </li></ul><ul><li>Past Financings </li></ul><ul><li>Proceeds </li></ul><ul><li>Cap Tables </li></ul><ul><li>Valuation Methods </li></ul><ul><li>59/60 </li></ul><ul><li>Discounted </li></ul><ul><li>Comparable </li></ul><ul><li>VC method </li></ul>
  10. 10. Valuation &/ Discounts <ul><li>Entrepreneur's Background- was he COO, Rank VP, Management Risk then is 2% to 20%/yr discount </li></ul><ul><li>Financial-5% & Opportunity Risk= 13% </li></ul><ul><li>Market Risk (partners, P2P)=3% </li></ul><ul><li>IP Risk(Expandable, Defendable)4% </li></ul><ul><li>Bd of Directors 10% </li></ul>
  11. 11. Lets do some background. We first must look at the market, measurements, opportunities, and outlook. Healthcare technology can be broken down to Connectivity, Commerce, Content, and Communities in the business areas. Lets do some background. We first must look at the market, measurements, opportunities, and outlook..
  12. 12. Angels must look at the market opportunity, endgame, barriers to entry, revenue models, success factors, future outlook and other key metrics. Four areas to evaluate are: 1. The technology’s scalability (will it go from bench top to full scale?) 2.       Its technical viability (will it actually work as advertised?) 3.       Its business viability (will it make money?) It’s political suitability (will politics kill the project?) 4. People- is this the team to do it?
  13. 13. 1.        Biotech (genomics, proteomics, platform/drug delivery, medical devices & therapies/treatments) 2.        Agritech (food science, animal feed, horticulture, fertilizers) 3.        Chemistry (combinatorial, synthesis, processes/reactions) 4.        Veterinary Science (diagnostics, therapies, vaccines). 5.        Material (composites, plastics, metals/alloys, liquids/solutions, ceramics, plasma) 6.        Environmental (meteorology, oceanography, geology) 7.        Optics (lasers, spectroscopy, x-ray) 8.        Engineering (consumer products, mechanical engineering, acoustics, energy 9.        Communications (fiber, switches, wireless) 10.   Software (biomedical/bioinformatics database, educational, financial, os, algorithms) 11.   Hardware (robotics, storage) Electrical engineering (sensors, super-conductors and semi-conductors).
  14. 14. Thank You Rick Holdren 832-755-7877 [email_address]

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