LSA Investment Process

Stage 1

Pre-Screening


After vetting the reference checks, the Pre-screening Team and the referring member/partner will evaluate the opportunity and decide whether to pass or recommend advancing the company to Stage 2.

The strength of the applications will be evaluated on the following, but not limited to -

  1. The Problem: What problem does the company want to solve, and how big is the problem?

  2. The Solution: Briefly, what solution has the company developed, and how does it solve the problem?

  3. Team Expertise: Why does this team have the expertise to advance the solution to its next milestones and inflection points?

  4. Use of Proceeds: How will the company use the proceeds to achieve a value inflection point of 2X or more before it needs to raise additional funds?

Stage 2
Bi-weekly Screening Meeting

Each invited company will present for 15 minutes, and be given 10 minutes for Q&A. The attending members will internally discuss, upon which a decision will be made to advance or pass the opportunity.

About 2/3 of deals are passed at this point. LSA’s Investment Fellow will communicate the reason for passing and often an invitation to resubmit when specified milestones have been met. We typically get this done within 2 weeks.

Stage 3
Due Diligence


The Due Diligence (DD) Team will be formed, comrprised of DD lead(s), the fellow, and members who indicated interest in participating to perform Stage 3. A 1-hour due diligence meeting will be held for the companies that receive positive responses from Stage 2.

Meeting will be comprised of -

  • 20 minute presentation

  • 25 min Q&A

  • 15 min LSA member-only debrief (continuing the recording through the debrief)

At this point, about 2/3 of deals are passed at this point. LSA’s Investment Fellow will communicate the reason for passing and often an invitation to resubmit when specified milestones have been met. We typically get this done within 2 weeks.

Stage 4
Invest


The LSA Deal Lead and the applying company’s CEO will work with the Executive Director to communicate with the membership to close the deal. Our Executive Administrator handles all coordination; the company does not send documents to the individual investors.

For each investment, we write one check and sign one set of paperwork and so appear as a single investor on portfolio company capitalization charts.  Our separate individual members pool their holdings through special purpose LLCs.  We prefer active investment, generally providing a board member or Observer, or some other form of strategic or operational advisor to portfolio companies.  We will invest in companies outside of our geographic area, especially when those companies are supported by local angel groups who we know or have invested alongside.

Post Investment

We like to have a representative on the Board or with Board visitation rights. Board visitation can be done remotely. We participate on average in over 2 further fundraisers by the company. This representative plays an important role in maintaining relationships with LSA members and facilitating our participation in later funding.

We encourage our members to provide mentoring and contacts to help the company. The entrepreneurs are well-served to reach out to the investors during our process so they have an established relationship to be used post-investment.

The CEO of the portfolio companies are invited each year to an LSA Investor Call (held via Zoom) to give an update via Zoom to enable live discussion. In addition, they are invited to all of LSA’s events and meetings held throughout the year to enable in-person interactions that maintain constant connection with the LSA investors.

Distribution (M&A/IPO)

CEO of the company must communicate with the Executive Director of LSA in the event of Distribution.

We keep the holdings in our LLC as long as reasonable. When there is an IPO or stock merger with another company, we usually distribute the individual holdings to the members.

At the time of exit, members who are invested receive a check from the NVC investment LLC for the same amount as they would if they had made a direct investment in the company. If payments over time and milestones are involved, the LLC will monitor and issue payments. If stock in the acquiring company is involved, member investors will receive title to the stock.

Members will receive a K-1 for tax reporting at the end of each year.