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The fund selects companies which may become the subjects of investments. Next, the list of potential investments objects is narrowed it down to "investment opportunities" and "qualified investment opportunities," whereas the selected companies are subject to further scrutiny. In this phase the fund proposes to the selected companies the preliminary plan of further actions and general conditions of the transaction (the so-called termsheet).
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The fund conducts detailed due diligence of the legal, financial, business and technological aspects of the company, which the given fund is interested in. If it should turn out positively, the fund agrees with the company or its owners the terms and conditions of the investment agreements, regulating the form of the investment in the company. During this phase the fund prepares an optimum structure for the investment.
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The results of the conducted due diligence and the recommendations of the investment team of presented before the investment committee. The investment committee then takes a decision as to the value of engagement in the company. At this stage the final terms and conditions of the agreement with the selected company or its owners are negotiated. If the investment agreement should be signed and concluded, the company becomes a portfolio company.
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Once the period of investing in the portfolio companies is over and the company reaches the value which would allow selling the shares or stock in the company with a profit, the fund executes a so-called investment exit. An investment exit is generally executed by introducing the shares of the company to be traded publicly on the regulated or the alternative market (in Poland the WSE and NewConnect respectively) or otherwise by selling the shares or stock to another entity (usually and other VC/PE fund or a strategic industry investor).
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