What is Check Invest?
An evidenced-based assessment by a qualified independent expert who is professionally accredited to verify claims made by fund-raisers on their Intellectual Property, their background skills and knowledge, and the sustainability of their business processes.
Why is it needed?
Opportunities to invest in new businesses are at an all-time high. In 2015 over 580,000 new UK businesses were registered. Many entrepreneurs are innovative, have high growth potential and need start-up and seed capital. The Alternative Finance market is now valued at over £1 billion. Crowdfunding exceeds £100 million pa. Angel investors now work in syndicates with sector specialist leaders. Supply and demand are at record levels. Yet success rates remain low. Over 90% of entrepreneurs fail to attract enough funds and over 50% of angel investments fail to achieve their targets.
The Big Issue
The majority of seed fund-seekers are considered by funders as high risk. Entrepreneurs often have no proven track record leading to trade sale exits, do not offer investors a comprehensive IP audit report, and have limited experience in business process sustainability to support a 5-year growth plan before exit.
The majority of angel investors are risk-aware and reject the majority of candidates who ask for funding. Their main concerns are 3 risks: IP protection, business management skills, and business model sustainability for 3-5 years.
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Applicants can also select specific areas to be checked which may have high value based on recent changes in the market sector or in the management team. These may include “mystery shopping” a competitor or conducting a background check on a new manager or advisor. The scope of work excludes financial due diligence as this is covered by FCA authorised bodies. The assessor is not FCA authorised and Check-Invest is not an authorised process within the scope of the Financial Services and Marketing Act 2000.
Checks on responsible business processes include Business Continuity Planning, Disaster Recovery Processes, Data Protection Practices, Insurances, Supply Chain Contracts, Health and Safety, Environmental Management, Employee and Customer Engagement. These are fundamental building blocks for business sustainability which are often overlooked in “basic” due diligence.
Every applicant will have past, current and pending verifications which can be “passported” into the Check-Invest review at no cost. This allows known and potential strengths to be included and prioritised. For example recent unregistered applications for new IP, pending management qualifications and ISO approvals can be easily imported into the report. Once the scope of a Check-Invest review is agreed a quotation for the report will be supplied. Fees can be shared between parties as all stakeholders will benefit.
All work is strictly confidential. The report is confidential to the sponsor who may be a Director, a crowdfund platform provider, or a potential investor. The report sponsor is free to share information with other stakeholders if they wish.
Check-Invest provides a valuable safeguard process which enhances the transparency of opportunities to match fund-raisers with investors. This in turn reduces risks for investors and enables more entrepreneurs to raise funds. Demand and supply within the alternative investment market climate is at an all-time high. Whilst no investment is risk-free, Check-invest improves the checks and balances for all stakeholders.
Due Diligence Reporting
Crowdfund platforms and Angel Investors conduct basic online due diligence using public records bodies such as Companies House, credit agencies, market research reports and IP registers. However market reports may not cover innovative products or new services, online financial accounts may be up to18 months old, new competitor IP applications may not be lodged on public IP databases, and there is usually no onsite check of the operating business sustainability processes in place.
Check-Invest applies quality management audits that are recommended by nationally recognised best practice bodies: the Intellectual Property Office, Background Personnel Security Standards providers, and the Organisation for Responsible Businesses whose audit covers responsible business practices.
A Certified Management Consultant, audited to Gold Standard by the Organisation for Responsible Businesses; trained in Background Personnel Security Vetting by the National School of Government; Certified IP agent, IPO listed Mediator, and approved to conduct IP audits by UK Intellectual Property Office.
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