Private equity clubs, angel networks and funds undertaking due diligence on potential investee paperwork is time-consuming, expensive and can delay deal closure. By utilising the FounderCatalyst ‘fund’ role, you dramatically reduce your due diligence overhead…for free.
We pride ourselves in producing quality legal documents which are fair and balanced for both investors and founders. Our principal documents are based on BVCA templates, which have been tailored by our Chief Legal Officer. That said, the core documents - the subscription and shareholders’ agreement and articles of association - can still be over 100 pages in total, so without our ‘fund’ solution due diligence could still be an expensive and time-consuming process.
The ‘fund’ functionality allows a founder or their advisors to invite you to the platform in a fund role. Although fund members may, in due course, become investors, initially the fund functionality allows funds, angel networks and private equity clubs to make an initial assessment of the investment opportunity and decide whether they, or their members, wish to proceed as an investor.
‘Fund’ functionality provides full access to a company’s Intelligent Data Room, plus a customised ‘fund term sheet’ which identifies any key settings or parameters in the round that should be highlighted to your members. This scrutinises dozens of drafting and commercial points within the documents and could include, for example, where a founder has requested specific customisation to their paperwork, or where certain investor rights or consents have been removed.
This feature allows you to fast-track due-diligence and focus negotiation on the terms that matter.
Founder defines round and invites the fund to the platform.
Fund undertakes accelerated due diligence.
Fund can see the impact of document changes dynamically.
Participating investors then close on the terms negotiated.
Reduce your legal due diligence / negotiation cycle dramatically by using the ‘fund term sheet’ to focus negotiation efforts on unusual terms.
You do not need to instruct a lawyer to review hundreds of pages of documents. There is no charge for signing up or using the fund feature.
Providing comfort that the deal on offer is balanced and fair using the ‘fund term sheet’.
The most cost-efficient efficient way of completing deal legals – more of your investment goes to the start-up rather than due diligence or legal fees.
At the end of the funding round, all founders and investors receive a full completion bible containing the definitive contents of the round's Intelligent Data Room, including signed documents.
Processing transactions faster allows you and your team to increase your responsiveness and the number of deals you can manage at any one time.
The platform will produce and automatically populate the following legal documents:
Initial Term Sheet
Founder Service Agreement
IP Assignment Letter
Subscription and Shareholders' Agreement
Articles of Association
Cap Table: one for before the investment, and one for after it
Final Term Sheet, summarising all key points agreed with confirmed investors
Resolutions for both shareholders and directors
Disclosure Letter (with the disclosure bundle also managed on the online platform)
The platform also creates the following documents:
All documents are generated and signed electronically, via the platform.
Some angel networks simply don’t have the time or in-house legal expertise to undertake detailed legal due diligence, and don’t have the budget to pay for external advice. By using the FounderCatalyst ‘fund’ role, you can instantly identify key legal aspects of the proposed deal terms that deviate from ‘market standard’ – allowing you to either alert your investing members, or to negotiate on their behalf.
Once a founder has defined a funding round on the FounderCatalyst platform, they can invite potential investors and funds to review their documentation. To streamline the fund review process, the platform provides you with a customised ‘fund term sheet’, which immediately highlights any unusual terms, meaning you do not necessarily need to review the full set of legal documents. This enables you to reduce deal timescales and accelerate the qualification, due diligence and completion processes.
You can then decide which items to negotiate and which to accept. As any changes a founder makes to the legal paperwork take place on the platform, your customised term sheet is updating dynamically and in real time. When all of the legal documents have been agreed and everyone is happy to proceed, the final documents are produced and stored in the round-specific Intelligent Data Room. Investors electronically sign all of the documents via the platform and founders are notified once all is completed.