What are the supporting documents for investors?
Checklist for Supporting Documents
Before any credible private equity investor will write a check to an entrepreneur they will conduct a complete background checks and detailed examination of the Company’s legal status and other important documents. We have provided discussions here for entrepreneurs to know about these supporting documents, and what entrepreneurs need to know before they talk to any potential investors. Our discussions here come from in-depth interviews and discussions with some of the world’s leading venture capitalists and professionals.
Do not include your supporting documents in any business plans you mail out. First, you do not want to be educating the investors on your dime. And this information should be considered very confidential and includes very personal matters. You can bring along a notebook binder with masters, or even with copies, to your face-to-face meetings with investors. That way, if you find that there is serious interest during the meeting, and the VCs begin to rattle off things they will need for due diligence, you have the documents ready to photocopy in their office.
We also found it very helpful to prepare a checklist of all the items you need to have at the ready. Create a simple Word document you can fax or send as an e-mail attachment before your meeting. In the instructions ask them to please indicate which documents they will need for the meeting and ask how many copies they will need.
You Will NOT Get Funded Until You Complete This List!
Keep in mind that every single item (and many more!) we list below will eventually come up in due diligence before any investment in made by a professional investor. You want to demonstrate that you are prepared for and knowledgeable about the venture drill process we discussed in a previous Lesson. And this step of having a checklist for supporting documents can be used as a screener, because they will ask for them only if they are really interested in investing in your venture.
– Resumes/references of key executives
– Resumes/references of key employees
– Board of advisors: CVs, backgrounders
– Board of directors: CVs, backgrounders
– Listing of professional service providers, consultants, and contact information
– Detailed financials, including monthly cash budget table and pro formas for five years out
– Any professionally audited or reviewed financials
– Information about suppliers and subcontractors
– Corporate data, bank account information, and contact(s)
– Articles of incorporation/chartering
– Bylaws and notes from board meetings
– Listing of marquee customers: key contact information, typical orders, how much they have ordered, volume, units, new orders, and when expected
– Letters of Intent to purchase products, purchase orders, details of orders in backlog
– Detailed product information: pictures of products, diagrams, exhibits, diagrams of architecture
– Copies of patent(s), patent-pending documents
– Information about any debts and their terms related to this venture, including debts of founders to the venture
– Tax returns, for at least the previous three years where applicable
– Market studies and marketing materials
– Questionnaires used to collect data as part of marketing research/product development
– Detailed results of marketing studies that support marketing, pricing assumptions
– Price list, literature, data sheets of direct, competing products
– Production and manufacturing details
– Current published information about the venture in magazines and research reports
– Current white papers published by the venture’s executives or scientists
– Significant contracts: business agreements, business partnerships, and strategic alliances
– Investment agreements with prior investors
– Employee/executive stock option agreements
– Insurance documents, product liability, general liability, and directors and officers (D&O) liability insurance
– Non-compete agreements signed by the management team and key contributors, particularly if they play a key role in the invention or development of the product/technologies
– Organization chart, current and projected with new hires
– Regulatory forms, pertaining to EPA reports, SEC reports, etc.
– Information about the property leases, copies of each lease