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Sadara Ventures
100 Al-Kawthar Street, Third Floor
Al-Bireh/Ramallah
Palestine

For all inquiries, please email:
info@sadaravc.com

Investment Process

Investment Process

The Fund will invest only on the basis of transparent, systematic and objective business criteria – and following extensive due diligence.

Our “due diligence” process is an active exercise (typically lasting 3-6 months), that includes: Extensive interaction with the target market, together with the founding team, meeting potential customers, partners/channels, and experts; refining of the venture’s business planning; and involvement in team building (where the entrepreneurial team is not yet complete). We occasionally use outside advisors to help with technology or other specific aspects of the due diligence, and we do extensive reference checking on the entrepreneurs and key members of the team.

We encourage entrepreneurs to view the due diligence process as a 2-way street, that should also provide them with an improved understanding of their business prospects, valuable contacts, and familiarity with Sadara and its principals before we engage in what we hope will be a close, long-term partnership.

Our process will generally go through three stages as follows:

Presentation
 

The first stage is the presentation of the opportunity. Generally, this stage consists of three steps; initial approach, full presentation, and submitting a detailed business plan. Initial approach ideally will happen through email to one of the Fund’s managers. We expect entrepreneurs to submit a short (1-3-page) executive summary outlining their business idea. You can refer to the “Resources” section for guidance on what we expect an executive summary to include. Based on our evaluation of the material submitted (which may include further questions), we will let the entrepreneur know if it makes sense to meet and hear a more in-depth presentation. Full presentation usually involves a face-to-face meeting or a conference call with one or more Fund managers. Entrepreneurs are expected to come ready (preferably, with a deck of slides) to present the opportunity in depth, and should be prepared to answer questions that may drill down into details. For more information on a full presentation meeting, and more guidance on what information we expect to be covered, refer to the “Resources” section. Based on our evaluation and the interaction during the presentation meeting, we may ask the entrepreneur to submit a detailed business plan for review. Usually, submitting a detailed business plan marks the end of the Presentation stage and the start of the Validation stage. Refer to the “Resources” section for tips and guidance on writing a business plan.

Validation
 

The validation stage is where Sadara conducts extensive due diligence to establish an in-depth understanding of the opportunity, evaluate the risks, and ensure the business is viable. This stage generally consists of three steps; business due diligence, legal due diligence, and term sheet. Business due diligence involves a detailed review of the business plan, including market analysis, business model, and any proprietary technology (intellectual property). As part of this process, we may consult with subject matter experts, approach (along with the entrepreneur) potential customers in relevant markets, engage members of our advisory board, and discuss the business with potential market partners. Based on the above, we will often provide the entrepreneurs with feedback that is value-adding regardless whether we proceed with an investment or not. We expect our feedback will help entrepreneurs refine their plans, adjust assumptions and revise projections, among other things. This is usually an iterative process, whereby with each iteration we increase our level of confidence in the opportunity, and the entrepreneur’s in Sadara as a value-adding investor. In parallel, we will conduct extensive reference checks on the founding team. Legal due diligence is a standard process undertaken by Sadara to ensure that all verifiable claims and representations made by the potential investee are true and correct. Usually, the emphasis is on understanding all legal obligations that may represent a current or future liability to the company. As investors, it is important for us to know that the capital we invest will be used to build the business, and not to pay for loans or lawsuits. Further, the Fund and several of our limited partners have special requirements relating to anti-money laundering, anti-bribery, and social and environmental policies. Ensuring our target investee companies are/will be in compliance will also be part of this process. Pending successful completion of due diligence and our belief that an investment is likely, we may present the entrepreneur with a term sheet. A term sheet is a summary of the core terms and conditions that will comprise the full investment agreement. For the most part, our term sheet includes standard terms that have become commonplace in the industry. For a review and brief explanation of the most common terms an entrepreneur should expect to find in a term sheet, refer to “Term Sheets Explained” under “Resources” section.

Consummation
 

Once due diligence is successfully completed, and the parties have reached (or are very close to reaching) agreement on the term sheet, we effectively enter the third and final stage in our investment process. Compared to the first two, this stage is the shortest time-wise, and generally includes confirming that our Portfolio Committee (whose members are representatives of our largest investors) has no objection, concluding an investment agreement, and closing. Closing includes completing and signing an investment agreement. The investment agreement is essentially an expanded version of the term sheet that is placed into a legally binding context. Once the investment agreement is completed and signed by the parties, the financing is officially closed. Investment capital is then deployed to the company. Now, the hard work of building a successful business begins.