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The Eight Stages

The Eight Stages

“Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen.”

Winston Churchill

(1874-1965)

There are eight core stages in the ‘lifecycle’ of the Fund’s investment in a portfolio company.

Stage 1 Online Application and Review

If a company is in the process of raising capital and its business opportunity is thought to meet the investment criteria of the Wellness Fund, the first step is for the prospective portfolio company to complete and submit a funding application for its proposal. The information provided in this form is the information we use to make its initial assessment about whether to proceed. We will usually not sign Non Disclosure Agreements (NDAs) and recommend applicant companies leave out any particularly sensitive information from their initial application. There is no requirement to provide a full business plan at this stage.

Stage 2 First presentation

If the proposal appears to meet initial qualifying criteria, a meeting at Sturgeon Ventures’s London offices will be arranged. This should be attended by as many of the applicant’s senior management team as needed to give a full picture of the company. We would normally ask for sight of business plan documents at this stage and, if the company has appointed advisers, recommend that the company’s principals are accompanied by advisers. The meeting is structured to last for an hour or more and commences with a prepared presentation from the applicant, followed by questions.

Stage 3 Assessment, deal structuring, timeline & conditions

From this point onwards, we will assess the key parameters of the business which will usually involve:

Provision by management of detailed information about the business;
A series of meetings at appropriate locations (including by conference call) to discuss commercial and financial aspects of the proposal. At this stage one or more of the Fund’s specialists will be brought into initial meetings with the management and usually also with the company’s key customers and suppliers;
Discussion and primary agreement of the structure of an investment, timeline and conditions precedent; and
Discussion and agreement of terms with any co-investors.

Stage 4 Approval and conditional offer made on behalf of the Fund

Stage 4 Approval and conditional offer made on behalf of the Fund

The Fund is organised so as to regularly hold investment committee meetings required to review and approve its transaction deal flow.

If the Investment Managers approve an investment in principle, an offer letter will be sent to the management of the applicant company outlining the terms and conditions of the offer, which will be subject to due diligence.

Stage 5 Due Diligence and Legals

Stage 5 Due Diligence and Legals

Substantive commercial and financial due diligence is then undertaken.

Due diligence involves the examination of the proposed investee company, its operations, market, customers, management and any other pertinent factors and is conducted by Sturgeon Ventures with assistance ,where appropriate, by external experts such as industry specialists and other professionals. This necessarily is a process which demands a deal of attention by company management, who must be ready for a period during which they will need to be prepared not only to run their company

but devote time as required to this process.

Completion of the proposed investment will be dependent on the results of the due diligence work being satisfactory to the Fund. Legal documentation will be drawn up as part of this process, including a subscription agreement governing the terms of the investment. Management will be required to warrant information provided in this process through appropriate disclosure.

ue diligence and legal process will be paid out of the investment, except abort costs.

Stage 6 Completion

Stage 6 Completion

Upon final approval & completion of the investment, cash will be

invested into the investee company on the agreed terms for the

applicable securities. Where the offer had specified conditions

precedent the investment will be made subject to the fulfilment of

these conditions.

OLD VERSION

At completion of the investment, cash will be invested into the investee company on the agreed terms for the applicable securities. Where the committee in Guernsey identified conditions the investment will be made subject to the fulfilment of those conditions.

Stage 7 Post-investment monitoring

Stage 7 Post-investment monitoring

In addition to maintaining communication with the Fund on strategic developments in the business, our portfolio companies will need to provide regular reports on business and financial progress, including cash flow projections, management accounts and audited financial statements. Depending on the circumstances of any particular deal, and the identity of any co-investors, the Fund will be represented on the board of the company by a director who may, for example, be a member of the Fund’s Advisory Panel or one of the Investment Managers. By this means the Fund may also best channel continuing support and advice to the portfolio company.

Stage 8 Exit

Stage 8 Exit

One of the Find’s key objectives is to maintain alignment with the portfolio company on agreed exit strategy. The Fund would expect to work with a portfolio company for a substantive period (typically though not necessarily 3-5 years) prior to taking an appropriate exit.