FREQUENTLY ASKED QUESTIONS
These are typical questions asked by both our entrepreneurs and overseas institutional investors.
Where are you located?
Our business covers Silicon Valley/San Francisco/Bay Area.
What do you do?
- We are working with CEO's and Boards to provide their company with a comprehensive due diligence report to move them towards capitalization.
- We also provide services to help manage investors, negotiate term sheets, participate in strategy meetings and in developing capital funding plans.
- We provide educational content to entrepreneurs, investors, private entities, academia as well as governmental bodies domestically and internationally.
- We also work on special projects in technology transfer (e.g., moving intellectual property from academia to private industry), in creating an angel investment eco-system for emerging economies, and in building innovation teams around new industry sectors (e.g., renewable energy).
What services do you offer to entrepreneurs?
We offer a complete validation service for businesses, including analyses of the business plan, the management team, funding plan to date, technology, intellectual property, and more. We can also provide a road map to make companies more successful and attractive to investors.
What services do you offer to institutional funders?
Angel Plus, LLC is very heavily networked in the capital system and is highly capable of working with mature private equity and venture funds to access international funders. We are very discreet and understand the cultural nuances associated with moving capital from one country to another. Angel Plus, LLC is very respected among overseas investors (e.g., limited partners) and has served as a helpful guide to identify reputable and high performing funds for them. Angel Plus, LLC's differentiating service is providing technical expertise on the front end (relative to the selection of private equity and venture funds) and on backend to monitor and stay informed about fund activities once funds are deployed.
How much does the due diligence report cost?
The cost is determined by the number of hours worked multiplied by the hourly rate. A typical report takes a minimum of 100-150 hours to produce. A high quality due diligence report outlines the strengths and weaknesses of a company or the fund and provides prospective investors with sufficient information to assess opportunity and risks and to make an informed decision. A full, deep dive due diligence cost a minimum of $30,000 (minimum 100 hours) and maybe more if the due diligence process gets delayed or becomes complicated due to unavailability of sufficient facts to support conclusions. It is important that start-up's factor into their financial business plan the cost of fund-raising for their companies in the same way that they set aside funds for protecting intellectual property (e.g., patent acquisition). A due diligence report by an objective 3rd party is as important as having a 3rd party appraisal of your house in order to qualify for a loan.
Early stage companies don't have a lot of cash, do you provide terms?
Depending on the company and its funding stage, there are a number of payment options and terms that we may accept in addition to cash payments. (e.g., cash + equity, etc.). This is on a case-by-case basis and assumes the company can reasonably pass due diligence.
How much do you charge for the team's due diligence services?
Depending on size of team, from $300-$400/hour for entire team. On case-by-case basis and depending due diligence outcome, a mix between cash and equity may be acceptable. Companies should expect 100-150 hours for a deep dive due diligence report.
How much do you charge for your individual consultant services?
Typically cash payment at $400/hour. On case-by-case basis and depending due diligence outcome, I may accept a mix between cash and equity provided a minimum of 50 hours is being commissioned.
Which investment groups do you work with?
There are 300+ angel organizations in the U.S alone. We have a network of angels that we work with regularly and will work with any angel groups in the US and abroad. We also refer companies out to venture capitalists depending on size of funding round.
Which international institutional funders do you work with?
Because we have excellent word-of-mouth referrals, we work with "walk-in" institutional funders or by referrals from professional colleagues. These are typically institutional funders who are new to the U.S. capital eco-system and looking for a guide to help them direct their fund allocation to other established funds. Due to confidentiality agreements, we do not share client information.
How long does it take to produce a report?
The typical report takes about eight weeks depending on the funding stage of the company and readiness of company to be reviewed. It can take a week or two longer if there are unforeseen issues that arise during the review.
How long is the issued report good for?
The DD report is issued on a specific date. The report is designed to be both dynamic and relevant not just for current funding raises, but for future raises as well. As milestones are being met, companies come back to us for either updates or for re-issuance. An update is the appending of significantly new information that would be of interest to new investors. A re-issuance is where a significant material change has taken place which would affect the previous assessment (e.g., major milestone achieved where a new valuation threshold is reached). It has been the experience of companies with a DD report, in hand, that they are able to navigate through the capital system more efficiently. They get through the deal screening process quicker, get before the investors sooner, and get a decision by investors faster. A good DD report will answer 90-95% of the questions normally asked by prospective investors. The remaining 5-10% are typically unique to the specific investment organization whether angel or venture capitalist. The key to getting capitalized is to get in front of as many investors as possible and to get an answer (thumbs up or down) as quickly as possible. The DD report will facilitate this.
Why pay for a DD report?
Each angel organization, venture capitalist or institutional funder may have their own due diligence process, but their reports are not necessarily transferable or shared. Commissioning your own report by a third party allows you to take your due diligence report to each of the funding organizations as a starting point. Because of the quality and thoroughness of our due diligence process, clients have found that it tends to expedite the due diligence process at each of the funding venues and gets them to the investors more directly. The key is to have a due diligence performed by a neutral third party.
The challenge for CEO's is having to repeat the company "story" multiple times and to go through multiple DD processes; each taking weeks to months. Having a DD report validated by a 3rd party allows you to offer an objective review of your company and to avoid the sometimes agonizing slow and the variety of due diligence processes a company must endure among investor groups, post presentation.
Is the DD report acceptable to all investor organizations?
It has been our experience that the quality of our DD report has not only been acceptable, it has been most welcomed by the investor organization community (from angels to VC's to fund managers). It helps them to more expeditiously review a deal and opportunity without having to invest the "upfront cost and time" to review a company. Given a choice, they would rather read a good quality DD report on a company than to have to vet the company on their own. The companies still have to go through the investor organization's internal DD process, but it is considerably truncated when the company comes with a DD report in hand.
Can I influence the outcome of the report and its assessments?
Once the due diligence process begins, the team members are literary in a "cocoon of silence" and work diligently to gather and access the data, facts, contracts, references, etc., provided by the company. Our assessments and conclusions are fact-driven and while company representatives can provide material fact, they cannot insist on a particular outcome. The company is provided a copy of the final draft to review "for accuracy only". Accuracy is an important goal to achieve in the due diligence process and we are more than willing to re-visit conclusions if newly introduced facts justify a substantive change. Companies are also given an opportunity to offer a "counter" conclusion or assessment, but it has been our experience that the investors tends to give more credence to the due diligence's team's assessment and conclusions.
May I speak to companies that have used your services?
Please visit our website at www.angelplusllc.com to see testimonials from past companies and clients.
Who pays for the report?
The company commissioning the report (e.g., entrepreneur, investors, municipalities, VC's, etc.). In case of fund-of-fund, investors will pay for services.
Who gets the final copy?
The template of the report is copyrighted, but the final, issued report and its content belongs to the company that commissioned the work. They final product is designed to be updated or re-issued as new milestones are met or achieved. Institutional funders get a company of due diligence review of PE/VC's.
How big are your teams?
The size of the team depends on the stage of the company, its complexity and the technicality of the product offering. The team can be as small as 6 members or as many as 20 members depending on the corporation. With respect to fund of fund, one to two experts will be involved in reviewing PE/VC's.
How will your report help my company?
We know from experience that our deep dive due diligence reports benefit companies in three ways:
- 1) by giving investors a factual basis for making an investment decision,
- 2) by expediting the investor review process (i.e., they are either in or out so you can move on),
- 3) by making it easier for the CEO to present their investment opportunities to investors (i.e., don't have to repeat 90% of the pitch; allowing company to focus on the last 10% of questions which are unique to the investor and which generally determines whether CEO can close the deal).
What business sectors do you work with?
We work in all industry sectors, but have a specialty in the more complex industry of technology, medical device and life science.
How can I see a sample of your reports?
Contact Shirley@angelplusllc.com. An illustrative sample of the Table of Content will be provided.
How do I know that Angel Plus will help me move towards funding?
While there are no guarantees that a company commissioning a due diligence report will go on to receive funding, our experience has been that the probability for success is higher when you have one in hand "before" you present to investors. We offer both the entrepreneur and investor a common reference point from which to begin the investment relationship.
Given the limited resource of start-ups and as a matter of integrity, we do not perform due diligence on every company who comes to us because some companies are just too early stage and could not pass due diligence or there is a conflict due to pre-existing professional relationships. If we believe a company has better than a 50/50 chance to pass our rigorous vetting process, we will consider doing their due diligence report.
In 2012-2013, three of the top five companies with highest funding at a major, international angel organization had their due diligence led by Shirley Gee, Managing Partner of Angel Plus, LLC. This is validated by the testimonials in our website. We regularly work with other angel organizations, VC's, fund managers, and private equity groups to assure our due diligence product covers all of the topics of interest to prospective investors and meets the high standard and criteria they have set for validation and fact-finding.
Since then, companies who have passed our rigorous due diligence process have all gone on and raised capital for their companies.
How do I know that Angel Plus will get me to quality PE/VC funds?
The quality of our work is easily discernible and evident in the due diligence assessment report of the PE/VC. It is comprehensive and thorough and the end result of countless interviews and review of fact-based, public documents (as opposed to only PE/VC generated documents). No PE/VC get onto our list for consideration without having gone through a rigorous review and assessment. Many of the PE/VC's recommended are from relationships build over numerous years within the capital eco-system.