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Investment Process | Steps, Tools, Documents, Timing

Deal Invite​​

Once we identify a deal is worth investing in, we will share it with our members and gauge commitment.
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The decision to move forward will depend on the commitment level of our memebers. In the event we move forward, a  personal invite with a hyperlink to one of our platforms will be sent out. Platforms we use include Flow, Sydecar, Allocations, Odin, Canopy or Carta. 
 

Upon clicking an invite link, you will be taken to the invite page, which explains that you’ve been invited to a deal and will now be prompted to create an account in order to access details.

Deal Documentation

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The page for the deal that you've been invited to will have been curated to include all the information you’ll need as an investor to decide whether to investor in an opportunity.
 

Investment Memo

A short memo will provide as much context as possible about the investee company, the terms of the deal and the overall market opportunity ahead of your investment. You will typically find information about the investee company’s vision, market size, notable parties co-investing, performance to date, team structure and how they intend to use the funds (e.g. hiring and commercial growth plans).

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Files

Below the Memo section, you’ll find the Files section - an area where all legal documents related to the deal can be viewed and downloaded at any time. This section can include the following documents:

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  • Pitch Deck - If a pitch deck is available for the investee company, the deal lead will make it accessible here. This is a document prepared by the investee company themselves to explain the mission of the company, and how they intend to use the funds from this latest round.

  • Investment Agreement - The legal agreement between the Investee Company and all of its investors. As an individual investor, you will only be party to this via the SPV, so no individual signature will be required from you. At the point of being invited to the deal, this file is likely to either be a draft investment agreement, or a completed investment agreement from a previous investment round. You’ll be able to view the completed investment legals for the deal once it’s been closed.

  • Deal Sheet - This document contains all terms that are specific to the deal, such as the investee company, type of asset being purchased, carried interest, voting and pre-emption rights. Deal sheets are generated uniquely for each individual investor in a deal, and can sometimes include custom text for scenarios in which the deal lead is implementing carry hurdles, or if there’s a change to how fees are being paid.

  • Syndicate Terms - The agreement outlining the relationship between the investment platform operator, the Syndicate Lead, the SPV (Nominee) and yourself (Syndicate Member). By investing in the deal, you’re automatically agreeing to these terms.

  • Platform Agreement - The terms of proper conduct and use of the investment platform agreed between yourself as a user of the software. This also covers the platform's relationship with you, and the declaration of trust between you and the investing vehicle. By investing in the deal, you’re automatically agreeing to these terms.

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Deal Details

While all relevant investment details should be available through the deal memo and supporting attachments, these are the most pertinent details needed for making a decision whether to invest:
 

  • Investment Type - The particular investment instrument that will be used in the closing of this deal. The ‘investment type’ delineates whether an equity or debt instrument is being used, and the specific type of instrument.

  • Carried Interest - This is the % share of profits on a successful exit event you’ll be expected to share with the Syndicate Lead. This field will only show for syndicated deals, and not for Founder-led deals, as carry is only charged on deals led by a Syndicate Lead.

  • Proxy Voting - The individual to whom voting rights for the overall SPV will be proxied to. Sometimes voting is not proxied, but usually voting is proxied to the Syndicate Lead, Founder of the Investee Company, or Chairman of the Investee Company.

  • Target Close - The date by which the Deal Lead expects the deal to close. Typically, this would coincide with the closure of the wider round by the Investee Company. This field may not be visible for some deals, as it’s not a required field for the Deal Lead to complete.

  • Total Round - The size of the round being raised by the Investee Company overall.

  • Pre-Money Valuation - The valuation of the Investee Company before the injection of any new capital from the ongoing round. For some deals, the deal lead will specify a post-money valuation instead, which denotes the valuation of the Investee Company after the injection of any new capital from the ongoing round.

  • Share Class - The specific class of shares being issued by the Investee Company to investors in this specific deal. For any deal conducted using a debt instrument, like a SAFE or Convertible Loan, the share class field will be hidden, as investors in the deal won’t be purchasing shares at the outset.

  • Share Price - The agreed price of the new shares being issued by the Investee Company to investors in this specific deal. For any deal conducted using a debt instrument, like a SAFE or Convertible Loan, the share price field will be hidden, as investors in the deal won’t be purchasing shares at the outset.

KYC &AML Checks

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The first time you invest with us you’ll be required to complete a Know Your Customer (KYC) and Anti Money Laundering (AML) check, which is a standard Customer Due Diligence (CDD) requirement in the UK, EU, USA and many other countries. Once you've completed KYC and AML, you typically won't need to do it again for 3 years. Our requirements vary depending on who is investing and where they are from.

Input Commitment

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Input the final amount you intend to invest in the investee company, disregarding any extra fees being charged by the Syndicate Lead. Please note that if your commitment amount is lower than the minimum amount specified by the deal lead when creating the deal, the platform won’t allow you to progress

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Under ‘Who is Investing’, please confirm the entity through which you’ll be making your investment into the deal. In most cases, you’ll be investing as an individual. If that’s the case, select ‘individual’ and progress to the next stage of the flow.

Wiring Funds

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Once you’ve successfully completed verification checks, the final stage of the investment flow will be to wire your funds into the SPV.

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There are three essential points to ensure that you have correct at this stage before executing the wire:

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  • The amount that you are wiring;

  • The custom payment reference, and;

  • Bank details that you are transferring your funds to.

Closing

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‘Closing’ is the process by which the deal is locked off from further investment. Once all funds have been collected for the deal, we will work on closing the deal, which involves the countersigning of investment documents and of course, wiring the funds to the investee company. There is no work required here by you as an investor, and you will not be required for any document signatures. At the end of closing, the syndicate’s investment is complete and your nominee will appear on the company’s cap table. We typically estimate 7 working days for a deal to close fully. 

Post Closing Documentation

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Proof of Investment - This is a unique document generated for each investor that outlines their shareholding or investment in the SPV specifically.


Executed Investment Legals - You can access a shared folder by clicking into the ‘Investment Agreement’, which will contain the full set of executed legal agreements that the Investee Company have countersigned.


Share Certificate - Again, the share certificate can be accessed through the same shared folder that the executed investment legals are stored in. Please note that the share certificate will be addressed to the nominee entity rather than you as an investor. The nominee entity holds the shares, but you and the other investors in the deal are the underlying beneficial owners.

Post Close Events

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Investor reporting

Reporting to underlying investors is at the discretion of the Investee Company, and is typically provided on a monthly or quarterly cadence.

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Share certificates

You will not receive any share certificates following the closure of a deal. However, we provide investors with certificates of beneficial ownership, which outline their holdings in specific deals. These can be downloaded via the platform.

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Selling and transferring shares

It is possible for investors to trade in and out of their positions in the SPV subject to a fee.

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Tax requirements by jurisdiction

  • Entities are considered Passive Foreign Investment Companies (PFICs) under the Foreign Account Tax Compliance Act (FATCA). FATCA requires Foreign Financial Institutions to report information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest, directly to the Internal Revenue Service (IRS).

  • We do not handle blue-sky filings. If you require this our advice is to seek a provider. We also do not deal with K-1 forms, as they aren’t applicable to PFICs.


The process for ensuring tax compliance for US investors is as follows:

  • Once per year, in the run-up to the end of March, PFIC documentation is provided to US investors, so that they may make a Qualified Electing Fund (QEF) special election and report annual earnings under the QEF regime (instead of being subject to the Excess Distribution Regime, which incurs additional taxation). This ensures no additional tax liability on their investment.

  • US investors have additional reporting requirements regarding their investment in a PFIC. We advise US investors to file Form 8621.

  • Additionally, if the value of your investments is greater than $50k, (or greater than $100k if you are married and file jointly with your spouse), you will also have to submit Form 8938. You can find more guidance here.

  • Those investors required to file Form 8938 must do so annually as part of their personal tax returns. Since the PFIC has no income (no dividends are paid), investors may choose only to file form 8621 once an exit event occurs, in order to make a QEF election on the capital gain. However, we advise investors to take independent tax advice on this matter.

  • We provide the information needed for all of these filings, but don’t handle the filings for the user. You need to fill out the forms yourself with the data we provide.

  • We do not charge US investors for any of this, instead any relevant costs are passed onto the Deal Lead.

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