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How can you ensure deal execution stays on track in Venture Capital?

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Deal execution is the process of closing a venture capital (VC) investment, from the initial term sheet to the final wire transfer. It involves multiple steps, stakeholders, and documents, and can take anywhere from a few weeks to several months. As a VC, you want to ensure that deal execution stays on track, to avoid losing time, money, and opportunities. Here are some tips to help you achieve that.

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Anuraag Guptaa

Board Member | Mentor-Investor | President & CEO | Listed Unicorn, Pre-IPO Soonicorns | Harvard Business School |…
Krupa Jatania

A Next Gen Building Ideas ???| Chief of Staff @ Xare - Building a Billion Banks | Strategy & Investments | Master’s in…

1 Set clear expectations

Before you sign a term sheet, make sure you and the founder have a shared understanding of the deal terms, the timeline, and the due diligence requirements. Communicate clearly and frequently, and address any questions or concerns as soon as possible. You should also align with your internal team, co-investors, and legal counsel on the deal structure, valuation, and key issues. Having clear expectations can prevent misunderstandings, delays, and conflicts later on.

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Anuraag Guptaa

Board Member | Mentor-Investor | President & CEO | Listed Unicorn, Pre-IPO Soonicorns | Harvard Business School | MBA-NYU Stern, LSE, HEC | Author Igniting Minds with a Million Views | Incubating CEOs Gurukul
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I've learned the importance of keeping deal execution on track in Venture Capital. Effective communication is key; maintain regular, transparent dialogues with all parties involved. Implement a robust due diligence process to anticipate and mitigate risks early on. Establish clear milestones and timelines, ensuring everyone is aligned with the deal's objectives. Utilize project management tools to monitor progress and hold all stakeholders accountable. Finally, be adaptable to changing circumstances while staying focused on the deal's strategic goals.

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2 Prioritize due diligence

Due diligence is the process of verifying the information and assumptions of a potential investment, such as the market size, the product, the team, the financials, and the legal risks. It is a crucial step to validate your decision and protect your interests. You should prioritize due diligence and allocate enough time and resources to conduct it thoroughly and efficiently. You should also use a checklist, a data room, and a project management tool to organize and track the due diligence tasks and documents.

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Krupa Jatania

A Next Gen Building Ideas ???| Chief of Staff @ Xare - Building a Billion Banks | Strategy & Investments | Master’s in International Business, Hult '24
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Set clear and structured checklists for the due diligence process. Ensure the communication with the founder and startup team is clear, depending on the stage of the deal have understanding of what’s the major evaluation bucket and focus on that, rather than focusing equally on all buckets. Preferably aim for an evolving data room rather than a static one, because a lot of due diligence even happens outside the documents shared, so keep an eye out on the market, growth and social media signals.

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3 Negotiate smartly

Negotiation is the art of reaching an agreement that satisfies both parties, while preserving the relationship and trust. You should negotiate smartly, by focusing on the most important terms, being flexible on the less critical ones, and finding creative solutions to bridge the gaps. You should also avoid being too aggressive, too passive, or too emotional, as that can damage the rapport and the deal. You should aim for a win-win outcome, where both you and the founder feel happy and confident about the deal.

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4 Streamline documentation

Documentation is the process of drafting, reviewing, and signing the legal contracts that formalize the deal, such as the stock purchase agreement, the shareholders' agreement, and the board consent. It is a tedious and time-consuming process, but it is essential to ensure the validity and enforceability of the deal. You should streamline documentation, by using standard templates, simplifying the language, and automating the signature process. You should also review the documents carefully and resolve any discrepancies or errors before closing.

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5 Follow up promptly

Follow up is the process of completing the final steps and formalities of the deal, such as wiring the funds, issuing the shares, and updating the cap table. It is a simple but important process, as it confirms the completion and success of the deal. You should follow up promptly, by transferring the money as soon as possible, sending the confirmation and receipt, and thanking the founder and the team for their cooperation. You should also maintain a good relationship and communication with the founder and the company, as they are now your portfolio partners.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you ensure deal execution stays on track in Venture Capital?

1

2

3

4

5

6

1 Set clear expectations

2 Prioritize due diligence

3 Negotiate smartly

4 Streamline documentation

5 Follow up promptly

6 Here’s what else to consider

Venture Capital

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How can you ensure deal execution stays on track in Venture Capital?

1

2

3

4

5

6

1 Set clear expectations

2 Prioritize due diligence

3 Negotiate smartly

4 Streamline documentation

5 Follow up promptly

6 Here’s what else to consider

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