What Does “Prospectus-approved” Mean for an Investor?

We sat down with aescuvest’s own Frank Schwarz, who has been working in the capital markets for over 20 years and has accompanied numerous transactions, with a special focus on emerging companies. Quite a number of them have risen to become market leaders, like Danish biotechnology company Genmab. But of course, he has also seen some failures. So who could be better qualified to say what investors should have an eye on?

Hi, Frank! You and your team are supervising the drafting and filing of the prospectus for the companies seeking capital on aescuvest.eu. Could you please describe what a company needs to submit before it is presented on the platform?

There are indeed some hurdles to overcome before a start-up can be featured on aescuvest.eu. First of all, the majority of companies have already gone through one or even several programs of our partner EIT Health. On the one hand, that means the companies have received a lot of training regarding how to build a business. In addition, the companies have been screened by experts several times. We want only the best of the best to be listed on the platform. To ensure that, we have installed an additional filter: our independent investment committee that scrupulously assesses every application. Only after passing that assessment will they pitch to the aescuvest management, and we decide if the company is suitable for public funding.

Why do you have so many layers installed? Shouldn’t you know best what is sellable to investors?

Well, we probably know that quite well – while there is always room for surprises. However, obviously, it is impossible to be an expert in each and every one of the various fields of medicine, pharmacology, technology and so on. We do not want to offer what is sellable. The offerings must be promising and reasonable. Thus, we prefer to consult experts and ask for their humble opinion.

Once the start-ups have overcome those hurdles, what do they have to disclose to raise money?

We then take a very close look at the company, its team, achievements and certifications. And here again, we do not want to rely on our gut feeling. We have a list with approximately 140 questions that have to be answered, meaning we want to see proper documentation, e.g. audited financial results.

How is that reflected in the prospectus?

Actually, only a fraction of the information that we have screened is shown in the offering document. However, the data inspection gives us the feeling that the companies on aescuvest.eu can be taken for real. In the end, the prospectus is a liability document. With its signature, the management stands for the fairness of the information the company has provided. And they can and will be held responsible if this has not been the case.

What does that mean with respect to the risks for investors?

We are in the area of early-stage investments, which means the investors’ capital is still at risk! Market, management, technology, funding – risk factors are plentiful and can never be fully eliminated.

However, only risk takers get high rewards. The measures taken for selection and documentation shall help to focus on the most promising stories and save investors from fraud, impostors and castles in the air. That means, if a company is presented on aescuvest.eu, it has convinced us that they could possibly become a rising star.

Thank you, Frank!

Do you have any questions regarding the prospectus? Feel free to ask us anything – just drop a line to contact@aescuvest.eu