You have founded your own StartUp or are in the process of founding one and are now looking for the first early stage investors? Then this is the right place to learn more about our investment process for pre seed, seed or series A funding rounds. We work with external consultants and industry experts at various points of a due diligence and divide the auditing process of StartUps into 3 major areas:
- Commercial/Financial DD – analysis of the business model, market data and financial forecast.
- Legal DD – audit for legal risks
- Tax DD – audit for tax risks
At this point, we would like to point out our StartUp consulting offer to support preparing a due diligence in the run-up to a funding round for StartUps. In this context, we recommend that every StartUp, especially teams without solid funding experience, perform a self check for investor readiness in the form of our mini vendor DD (DD by an independent third party). Together, we identify the most important audit components, critical points from the company history or in the financial case and provide valuable feedback on optimising your catalog materials such as the pitch deck or financial forecast. The check supports you in a delay-free auditing process and identifies bugs before they lead to severe reductions of the company valuation of StartUps by potential investors or unfavorable investment conditions. Check out our Consulting for StartUps Page for further details.
Depending on the typ and size of the investment, the steps listed below are selected or processed in full as part of the early stage investment process. In order to ensure a smooth and quick due diligence process, we provide you with an overview of the steps and potential audit points of CapInCon, based on a classic equity investment:
Part 1 Commercial Due Diligence:
- Submission of an extensive pitch deck or ideally investor deck/read deck of your StartUp
- Invitation to a virtual or personal meeting and Q&A on the pitch deck contents
- NDA for the appraisal of further assets in the initial company audit
Part 2 Commercial Due Diligence:
- Review of a transparent (integrated) financial model/forecast with detailed planning for the next 18-24 months and overall planning period of 5 fiscal years
- P&L
- Sales-based revenue planning incl. sales funnel and/or marketing funnel
- Personnel planning
- Liquidity planning
- Break-even point
- Unit economics for individual customers and KPI set within the framework of the customer journey
- Merchandise planning, if applicable
- Pre-check of essential contracts in the data room (e.g. shareholder agreement, IP etc.)
- Pre-check of essential economic documents in the data room (e.g. BWA or annual financial statements)
- Setting up a term sheet to sort out the rough key points of the investment
Legal DD:
- Comprehensive review of all material contracts for the execution of the operational business. Only realized facts and final documents can be included in the final assessment
- Audit of actions to secure the interlectual property
- Audit focal points usually result from the findings of the Commercial DD
Tax DD:
- Based on the findings of the Commercial and Legal DD, an assessment of the tax implications and risks of the business is made
- Summary DD Report
- Conclusion of the investment agreement
