The Lucky 5 Percent: How Startups Are Selected on Aescuvest.eu
Today, we would like to offer you a peek behind the scenes and detail how aescuvest selects the companies and projects that we host on our site.
Obviously, as an investor you only see the companies that made the cut. Since the very beginning of aescuvest in late 2015, in total only three handful of companies and projects were selected – and that represents round about five percent of all submitted applications. There are seven stages a company has to conquer in order for you to eventually get to know them. This is how we screen the companies.
All applications must be submitted via our standardised application template. Initially, we only request the most important information that allows our Investment Committee (IC) a thorough assessment. Among other things, a financial forecast is required (unlike a business plan or a pitch deck that are only optional), data privacy is key. All information submitted to aescuvest will be treated confidentially. We are going to share the full information provided solely with our Investment Committee, in order to make a sound decision. Our governance guidelines can be downloaded here. A limited subset of that data, containing the name the your start-up, basic contact details and the amount of money requested will be reported with our partner EIT Health for statistical reasons. At this point, we still have 100 percent of all applications.
Once submitted, the application will be screened by our Investment Committee. This committee consists of ten professionals and experts with backgrounds in medicine, finance, legal affairs, biochemistry, immunology, bioengineering, cell therapy and digital health. This team that hails from six different countries will challenge the plausibility and feasibility of the undertaking, look at it from all angles and carefully weigh the pros and cons. A minimum threshold of points is required to successfully pass the IC review! The applications of startups with an average evaluation score above 32 of a possible 42 points will be accepted for a personal meeting. An exception to the rule are enquiries with at least one evaluation bellow 21 points. Those enquiries will be rejected in any case.
After the Investment Committee voted in favour of the startup, its data is forwarded to our Head of Investment in order to conduct a “light” due diligence. For liability reasons, aescuvest can not conduct a genuine and legally-binding due diligence. However, it is in our best interest that the companies that we are hosting will prosper which is why we apply a strict quality control. If the due diligence turns out positive, it is high time to get in touch personally.
The Aescuvest management team – not to be confused with the Investment Committee – sits down with the startup founders and addresses all issues and questions that arose during the screening. The assessment by the Investment Committee is the linchpin for a project’s approval. For whatever reason, their “no” decision is binding. This really is a grill and only when 100 percent of the team approve of the listing, further steps are taken.
This might be the first time during an entirely digital process that pen and paper are involved – for one reason only: the startup and the investment committee sign the project agreement. It’s a match!
Now it is time to create and submit the securities prospectus that is required by BaFin (Federal Financial Supervisory Authority), according to the guidelines of the applicable laws. Since this process is the equivalent of a real due diligence it takes time. Occasionally, BaFin objects and demands to redraft the prospectus.
Open for business! Congratulations, the startup belongs to the 5 percent that made it to the platform. In some cases, it takes a whole year between the submission and the hosting of the company.
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