Seed Stage Due Diligence Guidelines

Posted by on June 21st, 2017

If your startup is successful in securing a term sheet from a VC (congrats!), you must keep in mind that there is still some way to go before money is in the bank. After signing the term sheet, the due diligence process will run in parallel with the preparation of the final legal docs (articles of association, shareholders agreement and employment agreement for the founders). The full process can last from two to four weeks, depending on the availability of the information and response times.

Due diligence has the reputation of a time consuming process but can actually run smoothly when the team is well prepared. More importantly, a due diligence process done right can set the foundations of a long-term partnership on the basis of transparency and trust while the experience can prove useful in future rounds.

So how much preparation is required? The investors will look at the financial / accounting and legal good standing of the company as well as the technical aspects relevant to the product, technology and business model. The list provided in this document is an attempt to gauge the scope of the accounting / finance and legal due diligence by outlining the main requirements for seed stage investments and providing the investor’s rationale behind each request.

The set of docs required might seem extensive, but the process is not as complex as it looks. At a high level, the investor primarily wants to ensure they are not getting involved in any type of legal or accounting issues that may hinder the company’s development in the future. Keep in mind that some of the requirements might not apply depending on the company stage. In some cases, the due diligence process can serve as an opportunity to level up your corporate governance practice.

Here at Marathon Venture Capital we treat due diligence as an opportunity to help founders build a better company. We perform the process trying to address any issues early enough, while respecting a startup’s ultimate asset, i.e. founders time. We hope that these guidelines will help founders get a better understanding of the process and its underlying rationale, towards the efficient completion of an investment.

Startup equity is a function of risk

Posted by on June 6th, 2017

How should equity be split among founders? What about employees or external partners? Entrepreneurs struggle with such questions in their quest to bring in people who can bring credibility, experience, and knowledge to the table. We have seen cap tables done both right and wrong. Here’s what we consider to be the first principle: Startup equity is a function of risk.

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Greeks in Tech London Drink Up

Posted by on May 27th, 2017

What

We will be visiting London this week in our quest to meet with Greek founders & techies around Europe. Beers are on us!

When

Monday, 29th May at 19:00

Where

BrewDog Shoreditch, 51-55 Bethnal Green Road, London, E1 6LA

Why

Because we believe that we create huge value by connecting people who are doing great things. Plus we like to drink with friends, old and new.

Disclaimer

There is no reservation since this is a late notice and we don’t know the number of people who will attend. You can help us by RSVP’ing at the Facebook event.

 

Marathon VC partners with Stripe Atlas to help entrepreneurs incorporate in the US

Posted by on May 23rd, 2017

Many ambitious tech founders choose to incorporate their startup in the US, usually in Delaware,  thanks to the stable & mature legal system but most importantly because the USA is the largest & most sophisticated tech market in terms of customers, investors & acquisitors.

Starting a company in the U.S., like most places in the world can be needlessly complicated – endless paperwork, waiting in line at the bank, steep legal fees, and tough decisions about what services to use. This is especially true for entrepreneurs coming from other countries who have to learn new processes and acquire all the necessary documentation. Incorporating in the US for non-US residents is a huge burden and cost but it doesn’t have to be one.

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