Stages of Deal Flow

1. Sourcing
   • Description: Identifying potential investment opportunities.
   • Activities: Networking, attending pitch events, reviewing pitch decks, receiving referrals from other investors or entrepreneurs.
2. Screening
   • Description: Initial assessment to determine if the opportunity fits investment criteria.
   • Activities: Evaluating the business model, market potential, team background, and alignment with investment strategy.
3. Initial Meeting
   • Description: Conducting the first meeting with the founders to learn more about the company and its vision.
   • Activities: Discussing the business, asking preliminary questions, and gauging the founders' passion and competence.
4. Due Diligence
   • Description: Performing a thorough analysis of the business.
   • Activities: Reviewing financial statements, conducting market research, assessing the competitive landscape, and verifying the legal and operational status.
5. Investment Committee Review
   • Description: Presenting the opportunity to an investment committee for approval (if applicable).
   • Activities: Preparing a detailed investment memo, answering questions, and addressing any concerns raised by the committee.
6. Term Sheet Negotiation
   • Description: Negotiating the terms of the investment with the founders.
   • Activities: Discussing valuation, equity stake, board seats, investor rights, and other terms.
7. Legal Documentation
   • Description: Drafting and reviewing the legal documents required for the investment.
   • Activities: Creating term sheets, investment agreements, shareholder agreements, and other relevant documents.
8. Final Approval
   • Description: Obtaining the final go-ahead to proceed with the investment.
   • Activities: Securing all necessary approvals, signing legal documents, and finalizing the investment details.
9. Funding
   • Description: Transferring the agreed-upon funds to the company.
   • Activities: Wiring the investment funds and confirming the receipt.
10. Post-Investment Monitoring
    • Description: Ongoing monitoring and support of the portfolio company.
    • Activities: Attending board meetings, providing strategic advice, mentoring, and tracking the company's performance.
11. Exit Strategy Planning
    • Description: Planning for an eventual exit to realize returns on investment.
    • Activities: Identifying potential exit opportunities, such as mergers, acquisitions, or IPOs, and preparing the company for the exit process.
12. Exit
    • Description: Executing the exit strategy.
    • Activities: Selling shares, distributing returns to investors, and closing out the investment.

Additional Stages for Canceled/Failed Deals

1. Deal Canceled
   • Description: When a deal is discontinued before completion.
   • Activities: Documenting the reasons for cancellation, notifying relevant parties, and updating records.
   • Common Reasons: Unresolved due diligence issues, unfavorable terms, change in business circumstances, or strategic realignment.
2. Deal Failed
   • Description: When a deal falls through after significant progress.
   • Activities: Conducting a post-mortem analysis to understand what went wrong, learning from the experience, and applying lessons to future deals.
   • Common Reasons: Financial discrepancies, failure to agree on terms, unforeseen market changes, or regulatory issues.