Preliminary Due Diligence Questionnaire

Preliminary Due Diligence Questionnaire

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Accelerating Value Creation

Preliminary Due Diligence Questionnaire

Completing this Preliminary Due Diligence Questionnaire (PDQ):

The purpose of this questionnaire is to allow Kernel Capital gain an insight into your business proposal and to ascertain if it is suitable for further investment consideration. All information received is covered by Kernel Capital confidentiality.

Please read the Document in its entirety before completing it as concisely as possible. In the meantime, feel free to contact us should you require further information or clarification.

Note: This is an important document and will be presented as received to the relevant Investment Committee. Please adhere to the question format. Fields in grey require your input. Use the TAB key to quickly navigate to each field.

For internal use only
Form No: / Date Received:
Attachment / Received (Y/N)
Latest management accounts
Current share register
Tax clearance cert
Copies of latest 6 months of bank statements
Copy of latest filed annual return

Table of Contents

Company Details

Transaction Details

Promoters, Management Team, Board of Directors (Service)

Capital Structure

Government Enterprise Agency and other Grants Received

Company Financials & Key Metrics

Details of Total Debt

Key Patent Data

Investment Details

Management Team and Non Executive Directors (Profile)

Financials

Product / Service

The Market

The Industry

Competition

Sales

Company SWOT Analysis

KERNEL CAPITAL IS A TRADING NAME OF KERNEL MANAGEMENT PARTNERS LIMITED,

KERNEL CAPITAL IS REGULATED BY THE CENTRAL BANK OF IRELAND

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Company Details

Company name:
Company registered number:
Date established:
Industry sector:
Business address:
Your name & position:
Contact details: / Phone: / Bus: / Mob:
Email:
Website:
Address:
Twitter ID/Blog address of the Company or promoter:
% of sales export focused: / %
Describe your Company’s business opportunity in 100 words or less
Government Enterprise Agency client? / Yes Date Approved:
No
Government Enterprise Agency Advisor/Client Executive: / Name:
Tel:
Email:
Please provide details of any previous Government Enterprise Agency equity investments including those that are administered by, or in conjunction with, commercial fund managers.
Name & Contact Details / Reviewed this form?
Auditors:
(If the Company has no Auditor please advise) / Yes No
Lawyers:
Date appointed: / Yes No
Other Advisors: / Yes No
Bankers:

Transaction Details

Requested investment from Kernel Capital: / €/£
Simultaneous investment from others, including from Government Enterprise Agencies:
Can you provide proof of these potential funds? / €/£ / From whom:
Required timeframe for investment:
How long will this investment fund the company for?
Company valuation: / Pre money €/£ / Post money €/£
If an offer is made consistent with the applicants request will it be accepted by the applicant? / Yes No
For Seed Fund investments, have you read our standard terms of investment as available on our website ? / Yes No

Promoters, Management Team, Board of Directors (Service)

Name / Age / Position / % Time Committed to Company / Length of Service with the Company / Exclusive to the Company / Reviewed this form in full
Yes No / Yes No
Yes No / Yes No
Yes No / Yes No
Yes No / Yes No
Yes No / Yes No
Yes No / Yes No
Yes No / Yes No
Yes No / Yes No

Capital Structure

Shareholder Name / Shareholder
Description / Share class / Share numbers / % Shareholding / €/£ Amount Invested / Date Invested / Repayable Date, as applicable
SELECTPromoterFriends / FamilyVenture CapitalStrategic InvestorBES FundBES IndividualsPrivate IndividualsBusiness AngelsOther
SELECTPromoterFriends / FamilyVenture CapitalStrategic InvestorBES FundBES IndividualsPrivate IndividualsBusiness AngelsOther
SELECTPromoterFriends / FamilyVenture CapitalStrategic InvestorBES FundBES IndividualsPrivate IndividualsBusiness AngelsOther
SELECTPromoterFriends / FamilyVenture CapitalStrategic InvestorBES FundBES IndividualsPrivate IndividualsBusiness AngelsOther
SELECTPromoterFriends / FamilyVenture CapitalStrategic InvestorBES FundBES IndividualsPrivate IndividualsBusiness AngelsOther
SELECTPromoterFriends / FamilyVenture CapitalStrategic InvestorBES FundBES IndividualsPrivate IndividualsBusiness AngelsOther
SELECTPromoterFriends / FamilyVenture CapitalStrategic InvestorBES FundBES IndividualsPrivate IndividualsBusiness AngelsOther
SELECTPromoterFriends / FamilyVenture CapitalStrategic InvestorBES FundBES IndividualsPrivate IndividualsBusiness AngelsOther
SELECTPromoterFriends / FamilyVenture CapitalStrategic InvestorBES FundBES IndividualsPrivate IndividualsBusiness AngelsOther
SELECTPromoterFriends / FamilyVenture CapitalStrategic InvestorBES FundBES IndividualsPrivate IndividualsBusiness AngelsOther
Do you have a Shareholders Agreement? Yes No
Please confirm that the Capital Structure outlined above agrees with current Companies Registration Office or Companies House filings Yes No
Please attach a copy of your current Share Register and your latest filed Companies Registration Office or Companies House Annual Return.

Government Enterprise Agency and other Grants Received

Date / Amount awarded / Drawn down / Description and Grant Type

Company Financials & Key Metrics

31/12/2012 / 31/12/2013 / 31/12/2014 / 31/12/2015 / As at date of submission
€/£’000 / €/£’000 / €/£’000 / €/£’000 / €/£’000
Income Statement / P/E __/__/__
Turnover
Cost of sales
Gross Profit
Overheads
Net Profit before tax
Balance Sheet / As at __/__/__
Fixed Assets
Intangible Assets
Current Assets
Current Liabilities
Long-term liabilities
Net Assets
Gearing / As at __/__/__
Total Debt
Issued Share Capital
Total Cash
Other Metrics / As at __/__/__
No. of employees
No. of customers
No. of products
Market size - Europe
- USA
- Other
Non operating cash raised / 31/12/2012 €/£’000 / 31/12/2013 €/£’000 / 31/12/2014 €/£’000 / 31/12/2015 €/£’000 / As at date of submission
Equity
Grants
Loan notes
Please attach a copy of your latest management accounts
Please attach a copy of bank statements for each bank account for the preceding 6 months from date of application
Please indicate if you have a current tax clearance cert and if so, please attach

Details of Total Debt

Loan Facility / Terms
Bank
Directors’ Loans
Shareholder Loans
Other

Key Patent Data

Patent # / Named Inventor / Territories filed/granted / Description / Status / Freedom to
operate/other
Patent Agent Contact Details:

KERNEL CAPITAL IS A TRADING NAME OF KERNEL MANAGEMENT PARTNERS LIMITED,

KERNEL CAPITAL IS REGULATED BY THE CENTRAL BANK OF IRELAND

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Note: For the remainder of this questionnaire you may answer questions as briefly or in as much detail as you deem appropriate. Complete, accurate information concisely stated is appreciated.

Investment Details

  1. How do you envisage the timing and method of returning invested capital?
  1. Has the Company entered into any contractual arrangement whereby a third party is paid a fee on completion of the fundraising or have any other commitments been given to such bodies regarding the current or future rounds? If so, provide details.
  1. To which other sources of capital have you applied for funding and when?

Management Team and Non Executive Directors (Profile)

  1. Please provide brief biographies of the management team (biographies should include relevant professional experience, responsibility within the company along with details of previous roles held with dates, job titles etc).

a.

b.

c.

d.

  1. For all personnel please complete the following, commencing with promoters, non-executives and management:

Name / Position / Salary / % Time Committed to Company / Length of Service with the Company / Exclusive to Company
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
€/£ / Yes No
  1. How do you believe that the management team can be improved?

Financials

  1. Which key assumptions is your financial projections model most sensitive to?
  1. What sources of funding are currently available to the business? What is the current cash on hand as of today?
  1. What level of capital do you anticipate is necessary to achieve a sustainable market position in both the short-run and the long-run?
  1. What is the rational supporting your stated valuation of the business today?
  1. How will the funding proceeds be used?

Product / Service

  1. Describe your existing and proposed product or service and its application to the market opportunity.
  1. At what stage of development is the current product suite (e.g. feasibility, proof of concept, patented, ready for distribution etc?)
  1. Outline the future product development roadmap for your current offering.
  1. What differentiates your company’s product or service and provides a sustainable competitive advantage?
  1. What are the key issues that need to be addressed to improve your company’s product or service?
  1. Have you commissioned any specific reports on your company’s technology/processes? If so, please outline.

The Market

  1. Describe the target market for your product or service.
  1. What is the geographical target market for your product or service?
  1. Is the market emerging, stable or declining?
  1. What is the market’s estimated value per annum in the short-term (2 years) and medium-term (5 years)

growth?

  1. Have you reviewed Independent Market Reports on the Industry and Product Area? If so, provide the title, author and date for each report below.

Title / Author / Date Published
  1. Are the demand drivers for your product or service identifiable?

The Industry

  1. Describe the competitive landscape of your target market, with market share and revenue information.
  1. Where does your company fit within the supply chain of the industry?
  1. What influence / alliance / relationship does your company have, or have the potential to hold, with players in the industry?

Competition

  1. Who are your major competitors and how are you differentiated from them?
  1. Do barriers exist that will inhibit your competitors from doing what you’re doing?

Sales

  1. What is the current or potential customer profile?
  1. What is the proposed short-term (2 years) and long-term (5 years) revenue model?
  1. Briefly describe the current sales and marketing plan.
  1. What percentage of your target market do you aim to capture within a three-year timeframe.
  1. List your top 5 key existing and target customers below.

EXISTING CUSTOMERS / TARGET CUSTOMERS
1. / 1.
2. / 2.
3. / 3.
4. / 4.
5. / 5.
  1. Has a customer already bought your product or service for cash? If so, please describe recent sales.
  1. If you are a pre revenue company, when will the first commercial sale be completed?
  1. Who will buy your product/service and why will they buy it?
  1. How will you sell and get your product to the end-user (distribution)?
  1. How much will your average client spend with you in a year and how have you calculated that figure?
  1. Briefly describe the sales process and timeline from identifying a prospect to getting paid.

Company SWOT Analysis

  1. Please populate the SWOT table below.

Strengths / Weaknesses
/
Opportunities / Threats
/

KERNEL CAPITAL IS A TRADING NAME OF KERNEL MANAGEMENT PARTNERS LIMITED,

KERNEL CAPITAL IS REGULATED BY THE CENTRAL BANK OF IRELAND

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Thank you for completing this Preliminary Due Diligence Questionnaire.

We have high regard for those with entrepreneurial spirit and recognise the significant obstacles and challenges faced by start up and early stage businesses. We are committed to delivering a standardised and transparent investment process. This Preliminary Due Diligence Questionnaire is substantial and in completing it you are providing us with detailed and commercially sensitive information on your business. We will at all times treat this information within the terms of our confidentiality agreement and with the respect that is incumbent upon us. The purpose of the detailed process is to allow us to provide you with a timely and direct response following our preliminary due diligence. We know that you will have put time into this and should Kernel Capital decide not to proceed this decision may be difficult to accept. We work on the principle that when declining an opportunity a prompt and clear response, although unfavourable to the applicant, is more in their interest than mixed messages and no progression. Should Kernel Capital or indeed any other provider of equity decline your proposal it is important to recognise that this is not necessarily a value judgement on the commercial merit of the opportunity presented. Opportunities may be declined because they do not qualify under the criteria of the particular Fund, they may not suit the Fund portfolio, the venture capital firm may believe they have little capacity to add value to the project, the company may not be suited to an institutional investor or indeed, although an opportunity may be strong, there may be similar applicants whom the equity provider believe are more suited to them. In submitting this questionnaire please remember that it is not reviewed in isolation but in the context of other existing and potential future submissions. In applying to this Fund you must recognise that all investment decisions are at our sole discretion and there is no obligation upon us to explain or justify the rationale behind such decisions.

Please submit your completed Preliminary Due Diligence Questionnaire via email to or to your Kernel Capital Account Executive, with requested attachments and any other documents which you feel are relevant to this Preliminary Due Diligence Questionnaire.

This Kernel Capital due diligence document is submitted on the basis of the completed information, which is correct to the best of my knowledge and belief.

I agree / Date:
Full name: / Title:

(printed)

For Internal Use Only – Notes

KERNEL CAPITAL IS A TRADING NAME OF KERNEL MANAGEMENT PARTNERS LIMITED,

KERNEL CAPITAL IS REGULATED BY THE CENTRAL BANK OF IRELAND

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