Investment Application Process
The investment application process can take anywhere from one to three months. Divergent endeavours to make this process efficient, thorough and transparent to the investee to ensure that all the risks associated with investment are understood and entrepreneurs are not unduly distracted from the operation of their core business. However entrepreneurs, particularly those seeking sophisticated external investors for the first time, should not enter into the investment application process lightly (let alone the investment itself).
Non-Disclosure Agreements
At Divergent we respect that many entrepreneurs require confidentiality. Because of the large number of opportunities that we see each year we have a preference not to sign external NDAs. Attached here are the two types that we are most happy to sign; the AVCAL Standard NDA, and our proprietary NDA. We invite you as a prospective applicant to peruse both and select which one suits your needs.
First Contact
Once identified, we gain a basic understanding of the investment opportunity either through discussion with management; review of a written Business Plan or Information Memorandum or from the completed Divergent Investment Application Form. At this stage we want to know about the business concept, make an assessment of the nature and size of the investment opportunity, and learn about the key risks that will need to be addressed.
Presentations and Meetings
This stage involves a formal presentation of the Business Plan and investment opportunity to members of the Divergent team. Please note that at Divergent we prefer not to sign external company's Non-Disclosure Agreements (NDAs). This is because we see a great number of applicants and the costs of having our legal team check each NDA would be prohibitive. We have a Divergent Capital standard NDA that a prospective investee company can sign, or we are happy to sign the AVCAL standard NDA.
Preliminary Due Diligence
The initial due diligence stage furthers our understanding of the business proposition and its potential. This stage typically involves:
The Term Sheet sets out the terms and conditions under which Divergent is prepared to invest which may, in the first instance, include the purchase of a call option over shares. It sets out the valuation of the company and the amount to be invested. The Term Sheet also explains what conditions will need to be satisfied by the Company and Divergent prior to Divergent investing in the Company.
Detailed Due Diligence
The detailed due diligence stage complements the work performed in the preliminary due diligence stage and thoroughly investigates all investment issues to confirm what we have previously learned or been told. This phase is entered into upon execution of the Term Sheet and includes full customer and pipeline reference checks. All aspects of our detailed due diligence process are communicated and discussed with management where appropriate.
Legal Due Diligence
When a deal has been successfully approved by Divergent, we may engage our legal counsel to provide advice regarding legal aspects of the proposal and may engage other external consultants as required. Documentation and Approvals Once we are satisfied that all deal breaking issues have been satisfactorily resolved, we prepare the investment documentation. This process translates the commercial terms and conditions described in the Term Sheet and any amendments thereto into a binding legal agreement.
Agreement Execution and Funds Transfer
Once all parties are satisfied with the documentation, execution occurs and the investment is transferred to our portfolio company.
Non-Disclosure Agreements
At Divergent we respect that many entrepreneurs require confidentiality. Because of the large number of opportunities that we see each year we have a preference not to sign external NDAs. Attached here are the two types that we are most happy to sign; the AVCAL Standard NDA, and our proprietary NDA. We invite you as a prospective applicant to peruse both and select which one suits your needs.
First Contact
Once identified, we gain a basic understanding of the investment opportunity either through discussion with management; review of a written Business Plan or Information Memorandum or from the completed Divergent Investment Application Form. At this stage we want to know about the business concept, make an assessment of the nature and size of the investment opportunity, and learn about the key risks that will need to be addressed.
Presentations and Meetings
This stage involves a formal presentation of the Business Plan and investment opportunity to members of the Divergent team. Please note that at Divergent we prefer not to sign external company's Non-Disclosure Agreements (NDAs). This is because we see a great number of applicants and the costs of having our legal team check each NDA would be prohibitive. We have a Divergent Capital standard NDA that a prospective investee company can sign, or we are happy to sign the AVCAL standard NDA.
Preliminary Due Diligence
The initial due diligence stage furthers our understanding of the business proposition and its potential. This stage typically involves:
- Technology assessment
- Market and competitive analysis - discussion with industry experts and proprietary investigations
- Management reference checks and personal financial checks
- Intellectual property review
- Financial due diligence - review of forecasts, historical financial statements, systems and controls
The Term Sheet sets out the terms and conditions under which Divergent is prepared to invest which may, in the first instance, include the purchase of a call option over shares. It sets out the valuation of the company and the amount to be invested. The Term Sheet also explains what conditions will need to be satisfied by the Company and Divergent prior to Divergent investing in the Company.
Detailed Due Diligence
The detailed due diligence stage complements the work performed in the preliminary due diligence stage and thoroughly investigates all investment issues to confirm what we have previously learned or been told. This phase is entered into upon execution of the Term Sheet and includes full customer and pipeline reference checks. All aspects of our detailed due diligence process are communicated and discussed with management where appropriate.
Legal Due Diligence
When a deal has been successfully approved by Divergent, we may engage our legal counsel to provide advice regarding legal aspects of the proposal and may engage other external consultants as required. Documentation and Approvals Once we are satisfied that all deal breaking issues have been satisfactorily resolved, we prepare the investment documentation. This process translates the commercial terms and conditions described in the Term Sheet and any amendments thereto into a binding legal agreement.
Agreement Execution and Funds Transfer
Once all parties are satisfied with the documentation, execution occurs and the investment is transferred to our portfolio company.
