In Luma Ventures we take the utmost care while analysing and selecting our portfolio companies. Therefore, we have prepared a structured and transparent investment process which helps us to make impartial decisions.
Our investment process consists of seven basic steps ending with recapitalisation of the company and the new ownership structure. In stages 1-4 we use the “stage-gate” system, during which further information is exchanged with entrepreneurs and we make internal decisions to postpone projects in process or reject them. At the stage 4 the entrepreneurs receive an offer from the fund, the consequences of which is the signing of the Term Sheet.
We acquire projects in many different ways; from direct contacts to submission by the website. We also conduct our own research of investment targets, during which we contact the selected entrepreneurs.
It is a stage of preliminary selection of projects. We scrutinise them in terms of compliance with our investment strategy and commercial potential. Entrepreneurs fill a standard application form and submit the default pitch deck.
MEETING AND INFORMATION EXCHANGE
Entrepreneurs receive guidelines on the extended pitch deck and are invited to present their project in front of the fund Partner. The meeting is followed by a detailed exchange of information taking into account the financial data of projects. Stage ends with a recommendation or a lack thereof for further processing of the project.
INTERNAL EVALUATION AND INFORMATION COMPLETION
It is a stage at which we analyse the information collected in detail in the wider circle of specialists. We check the market validity of the entrepreneurs and potential of offered products and services. At this stage additional meetings with the team may be required. Stage ends with the internal committee.
Entrepreneurs meet with representatives of the fund to get acquainted with the investment offer.
An official document of a Term Sheet type is prepared after the acceptance of the investment offer.
Stage due diligence is a process embracing a detailed enterprise analysis in terms of technological, financial, legal, commercial, and human resources issues. Investment agreement is prepared.
The actual implementation of the project. The company is recapitalised, new ownership structure and corporate governance are established.
Exit from the investment
The essence of investment fund operations is realisation of return on investment in the period from several to ten years. This is usually done by the total sale of shares or IPO. The type and date of exit from the investment is planned and determined individually depending on the nature of the company and the context.
Compliance with the funds strategy:
- Area compliance (at least one area).
- Geographical compliance.
- Required maturity of a venture
An adequate team:
- Quality (experience and credibility).
- More than one person in a team
- Experts and passionate people
- The Founders invested their money or raised the capital.
- Runaway min. 3 months.