About DD Process
At Invesdor, we do our very best to check the background and reputation of our target companies as well as the information given in the pitch by conducting what we call “Invesdor DD”. Please note that it’s not a full due diligence process, like the one done prior to a merger or acquisition, but mainly a fact and reputation check. The information is gathered from the company and when possible, from public registers and the internet.
The Invesdor DD is done before the pitch is published, therefore a DD has been conducted for each of the cases open for investment. The purpose of the process is to ensure that matters that are likely to be of importance to an investor considering participation in a securities issue are properly highlighted in the pitch, and that the information presented is fair, clear and not misleading.
It’s the responsibility of you as the investor to execute as comprehensive a DD process as you wish. To help you with that and to save you time, we describe our standard process on this page. When necessary, we do other checks than what’s stated here, but this is the minimum we do. Browse through the headlines above.
- We verify that requirements stemming from the European Union securities market regulation are met.
- We fact check the pitch content to ensure the information presented is fair, clear and not misleading.
- We review the trade register information and verify the share structure to ensure that all the shares the company claims to exist actually do. If all shares are not yet registered, we ask for proof that they have been issued correctly and paid for.
- We review the company’s Articles of Association to ensure all important information related to shares and shareholders’ rights, such as transfer-related redemption and consent terms, are properly highlighted in the pitch content.
- We review the list of shareholders and identify ultimate beneficiaries.
- We verify the identity of the director.
- We verify the decisions on the issuance have been made according to applicable legislation.
- We review the company’s existing and new shareholder’s agreements to ensure that terms relevant for investors are properly highlighted in the pitch.
- We review possible investment agreements, subscription agreements and other such agreements that are deemed relevant for the issuance and its terms.
- We check the group structure and ensure that it is disclosed in the pitch.
- We verify the IP rights the company claims to own are actually registered for the company. If the IP right is still in process to being registered, we ask for proof that an application for registration has been filed.
- We acquire all important agreements described in the pitch.
- If the company claims that their investors will receive some sort of tax benefit, such as EIS or SEIS in the UK, we ensure they have an appropriate decision from the tax authorities.
- We verify whether the directors have the right to issue more shares without a general meeting, and if they do, we ensure that it’s mentioned in the pitch.
- We check the amount of outstanding options, convertible notes and other arrangements that may lead to dilution of ownership, and ensure that these are properly disclosed in the pitch. If the board has the authority to issue more shares or other share-based rights without having a shareholders’ meeting, we also mention this in the pitch.
- We ask the company to confirm that none of their directors are or have been disqualified as directors or in bankruptcy, and that the company is not currently part of any litigation and that future litigation is not likely. Depending on what kinds of issues are found, the pitch either won’t be published or the problems will be highlighted in the pitch.
- We acquire a comprehensive credit rating report from a third party (Asiakastieto, Experian or equivalent) to verify several of the points stated in this charter, verify payment behaviour and possible defaults as well as verify that the company is not bankrupt or filed for bankruptcy. Depending on the origin of the target company, the report may also show the corporate connections of the company’s directors.
- We conduct a personal credit check for the director of the company.
- We check the latest financial statements (balance sheet and profit-and-loss statement) and verify that the financial information presented in the pitch matches the statements.
- We ask how the company’s financial situation has changed since the latest financial statement and disclose material changes in the pitch.
- We verify the amount of the company’s share capital.
- We find out the up-to-date loan situation of the company and make sure the amount of outstanding loan as well as possible business mortgages are properly highlighted in the pitch. We require information on interest rates and payback schedules. If necessary, we acquire loan agreements and disclose the information in the pitch.
This we do not check
For your convenience, we’ve listed below the matters that we don’t check on a regular basis. When making an investment decision you should consider the following:
- We do not set the valuation.
- We do not verify the working experience or education of the managers.
- We do not verify if tax liabilities are handled correctly.
- We do not check employment agreements, outsourcing agreements or agreements other than shareholder’s agreements and occasionally certain financing and other related agreements.
- We do not do a full review of IP rights but merely check the claimed IP rights are in public registers.
- We do not acquire information on cash position and burn rate.
- We do not evaluate the accuracy of financial projections.