Due diligence, term sheets and venture maths was the name of the game in Week 2 of VC Catalyst, as our investors drilled down into the details of the deal. There was plenty to take in, while an all-star lineup of presenters and the final Investment Theses presentations ensured we sent our newest cohort of investors off in style!
And just like that, we have graduated another cohort of investors from VC Catalyst, sending them out into the world with new networks, new insights and the skills they need to become better early stage investors.
Where Week 1 of the program helped to ground participants in the history and context of the venture industry, while also exploring the interactions with founders and how to manage a pipeline of investments, Week 2 purposefully dropped participants into the details of the deal, from due diligence, term sheets to venture maths.
Before signing up for a program like VC Catalyst, many people think these details are the only elements which matter in becoming a great early stage investor. But for our VC Catalyst investors, they know from Week 1 of the program that all these elements in isolation don’t necessarily make for a beautiful deal. Indeed, while they are the nuts and bolts of a deal, they are no guarantee for a successful founder-investor partnership.
By participating in VC Catalyst, our investors open the aperture of their investment focus to include more stakeholders beyond themselves and their potential investee companies. Understanding your own context, value add and portfolio requirements, as well as the founder’s unique set of skills and goals, downstream investors and the existing investor base, forces you to filter and commit to deals that work for all parties now and into the future.
To that end, while not discounting the importance of understanding and learning the intricacies of term sheets, due diligence and venture maths, our investors learn to change the context from trying to hyper-optimise on the individual components, to instead making sure they don’t kick any ‘own goals’ on the terms. In doing so, they can focus on the real opportunity, which is to grow the business.
With their learnings from Week 1 in the bank, our second week of teaching began with a debrief session, exploring the challenges of bias and decision making methods with a foremost expert in this space, Jill Klein from the Melbourne Business School. This set the scene for Pedram Mokrian’s tour of the varying approaches to negotiating a venture deal, including a framework for understanding stage investment for risk mitigation and the intricacies of due diligence.
Nailing down the practical elements of this beyond the theory is key, which is why VC Catalyst places such an emphasis on collaboration amongst participants. Whether it’s assessing an opportunity presented through a case study, or finding the nasties in a term sheet, learning by doing goes a long way towards reinforcing those concepts and understanding one’s own decision-making style.
Throughout the program, we are the beneficiaries of generous practitioners, who are open to providing a peek inside their portfolios. The insights into experienced investors’ real performance during our VC Maths session was particularly well-received, and we are grateful to those practitioners who are so open to sharing their time and knowledge.
And that’s it for VC Catalyst for this year! We have loved getting to know our new cohort of investors, and can’t wait to follow them as they continue on their investment journeys.
If you’re interested in joining a network of people who want to learn and build their own early stage investment portfolio, please get in touch.
Wade Institute of Entrepreneurship is a leading centre for entrepreneurial education. We deliver programs to accelerate learning, creation and connection.