We have developed a process of screening and qualifying our deal flow. On average, we expect to receive over 1 hundred business plans, of which we expect to conduct full due diligence on approximately 10 companies and invest in approximately 2 companies each year. The section below details the steps we will undertake in order to differentiate and qualify high quality deals.
- Evaluation: From the many business plans we expect to receive, we actively screen candidates through our investment criteria. We invite selected companies to our office to present their story. If one or more members express interest, a "Project Manager" will be selected and a team of network members will begin the due diligence process.
- Due Diligence: After the initial meetings, we identify the best candidates and begin various phases of due diligence. Initially, we ask for management backgrounds and references, full financials and capitalization tables, scientific papers, relevant patents, and market/competitive reports. Later, we will work with our advisors on in-depth technical due diligence, conduct third party calls and research, and look closer at other items such as corporate/legal matters or freedom to operate patent matters.
- Term Sheet/Close: For a small set of companies, we will issue a term sheet and negotiate the final terms and size of the round. In many cases, recruiting a venture capital syndicate to the deal may be necessary.
- Invest/Partner: After a successful close with RAIN as an investor, we will usually participate in the board at some level and remain "on call" to assist the management on matters such as strategy, finance, recruiting, operations, and exit.