Setting the Terms of Investment
Closing and Investment Management
Arizona Tech Investors receives approximately 300 applications a year. From those applications between 12 - 15 companies will be invited to present to the entire membership at one of ATI’s five Member Meetings during the year.
Businesses seeking investment capital from Arizona Tech Investors must begin the process by establishing an online pro- file.
In addition to providing basic company information, applicants will be asked to complete and attach the additional forms in the key documents section:
Once the basic applicant profile has been established, additional company information including updates and changes can be made at any time by logging back into the ATI applicant system.
At this time, Arizona Tech Investors and affiliated Sidecar Funds do not invest in securities raised through public solicitations as defined in Regulation D Section 506 (c). If you are a company that is considering seeking capital from Arizona Tech Investors and affiliates Sidecar Funds, please determine in advance if you have taken actions or plan to take actions defined as a general solicitation under Section 506 (c). If you have not made a decision on this matter, we encourage you to consult with your attorneys and financial advisors regarding costs and benefits of such action.
ATI reviews applications as they are received. Once ATI has confirmed that all requested information has been submitted, the first round screening determines if the application is consistent with ATI investment objectives. All applicants are noti- fied of their status following this review.
Feedback: If an applicant does not pass the first round screen, feedback will be provided and may include resource suggestions including support from individuals and other entities. On occasion, an applicant may be encouraged to re-apply after pursuing additional development.
The second round screening includes a more detailed review by the 9 member Screening Committee. It includes preliminary analysis of data, organizational elements including team expertise and experience, and assessment of the unique elements of the company. Often additional information about the company is required during this phase. The Screening Committee selects up to six semi-finalists from the Round 2 Screening reviews. All second round applicants are notified of their status following this meeting.
Feedback: For those not moving ahead, ATI provides feedback and resource suggestions from the Screening Committee.
Each semi-finalist gives a live, in-person 10-minute formal presentation to the Screening Committee, followed by a 15-minute Q and A session. While in-person is preferred, under unusual circumstances, this may also be done via video-conference. Up to three finalists are chosen following this semi-finalist round.
Feedback: All Semi-finalists are provided feedback.
In the week prior to the Members Meeting, an ATI member with domain expertise will contact the presenting CEO to gather information for a high-level diligence presentation on the company at the Members Meeting
The CEO of the company is expected to deliver the pitch. The CEO can bring up to 3 members of the management team to the meeting.
The CEO pitches for 10 minutes and then responds to questions for an additional 15 minutes.
At the conclusion of the Members Meeting, expressions of interest in each presenter are collected. The interested members become the core diligence team. Due diligence is the analytical process in which members who are interested learn enough more about a company to make an investment decision. A key benefit of ATI is the collaborative nature of this analysis: multiple members applying their expertise and sharing it enable members to move more quickly and more insightfully to investment decisions.
Detailed information about the due diligence process can be accessed here.
Term setting is the process of documenting the conditions under which ATI will invest in a company. The Terms define the conditions at which Members agree an investment is “worth it.” Most of the time, ATI is the lead investor and, hence, proposes and negotiates the terms. In those cases when a company brings to ATI an opportunity to invest in a deal already determined and led by another, ATI determines whether or not to move forward on those terms.
Terms of a financing can be overly complex and biased toward the company’s benefit or the investor’s benefit. ATI takes a balanced view, believing that fairness to everyone will make for better collaboration. To make this more clear, ATI has written a Standard Term Sheet for Series Seed Preferred Stock round, which can be found here. The Standard Terms cover the most important elements of an agreement between a company and new investors, and can be tailored to the specifics of a situation.
Once the Deal Terms have been agreed upon and the final elements of diligence are complete, ATI attorneys will draw up the various agreements to document the investment transaction.
Subsequent to closing, ATI investors are generally active investors. They will expect the following: