The Six Step Venture Capital Investment Process

Every venture firm has pretty much the same six step process.  It is not hard to understand, and every firm puts their own spin on it.  But you can pretty much count on these six steps occurring in sequence before you will see any cash in your bank account:

1) Introduction and initial internal screen (this is where most of the attrition happens)
2) First meeting or screening phone call. (generally within a week)
3) Due-diligence and additional meetings (this takes the bulk of the time)
4) Final meeting and decision to propose investment terms. (always on a Monday)
5) Term sheet negotiation and signing. (about a week)
6) Final legal diligence and closing. (about four weeks)

From beginning to end this process will take ~12 weeks for a non-competitive deal, but your results may vary widely.  In competitive situations, we have been able to compress those first five steps into a few weeks.  Getting to a definite “no” can take forever because if a deal has good potential, but is not of current interest, most VCs will say “not now” and leave the door open a crack.

We at NAV have modified this generic process to suit our investment style and strategy.  For example, we don’t have a final meeting with the entire company team prior to decision.  We have a final flurry of data gathering, but really we have had so many meetings leading up to the final decision it would just be redundant.

I will describe our entire process in detail in a separate post.

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