1. Initial Contact
The first step in the process is to contact Diamond State Ventures directly or through a professional intermediary. The initial contact may occur in the form of a telephone call or a written executive summary. However, to be formally considered for an investment a complete and detailed business plan must be submitted to Diamond State Ventures for review. One or two professional managers usually conduct the review of the business plan. Typical duration: 10 business days.
2. Business Plan
The business plan should include:
- Executive Summary
- Comprehensive overview of the company and its products and/or services
- Market overview, including overall market and targeted market segment size
- Competitive analysis, including direct and indirect competition
- Realistic operating financial plan with supporting assumptions
- List of the key members of the management team and their relevant experiences and qualifications
3. Preliminary Due Diligence
Diamond State Ventures will review the business plan and contact management about our interest. If the plan is of interest, preliminary due diligence is initiated. If it makes sense to proceed, a management meeting is scheduled. Typical duration: 2 to 3 weeks.
4. Management Meeting
The objective of the management meeting is to understand the dynamics of the management team and the company, including its products and/or services, its industry and the competitive landscape. Furthermore, the primary objective is to evaluate the chemistry between Diamond State Ventures and the management team.
5. Term Sheet
During this step of the process, the price, terms and conditions of a potential investment by Diamond State Ventures are negotiated. The term sheet is not a definitive document; however, it does spell out most of the major terms of the deal. Each term sheet is unique, but most contain certain deal points that are common to most venture capital investments. Typical duration: 2 to 3 weeks.
6. Detailed Evaluation
The next step is a rigorous application of fact finding on all aspects of the business plan, which will include:
- Background and reference check of management
- Review of historical financial statements
- Review of financial projections and sensitivity tests
- Review product or service / Customer reference checks
- Confirmation of market estimates with third party data
- Legal review of all corporate matters
Typical duration: 4 to 5 weeks.
7. Closing the Transaction
After satisfactory due diligence, the Diamond State Ventures attorneys will begin the process of drawing up the major legal documents and the company and its legal counsel will review the documents and supply the various schedules. Expenses for due diligence and documentation are deducted from the investment at the time of closing. Typical duration: 4 to 5 weeks.
Typical total duration to Closing: 12 to 20 weeks.
8. Post Closing Growth
After the investment has been made, the partnership commences. Diamond State Ventures can assist the company in many aspects of its business, including strategy formation, executive placement and financial resources.
9. Exit
In order to accomplish our goal of achieving superior rates of return, Diamond State Ventures needs to realize a return of capital within a defined period of time, which is delineated by the exit strategy. The exit strategy can take many forms, such as a refinance, sale, merger or IPO. This strategy is usually discussed prior to the investment and the decision to implement is made in conjunction with management.
