TYPICAL FORMAT FOR AN INFORMATION MEMORANDUM

•  VCL is uncompromising about the need for a succinct, convincing, thoughtful and consistent information memorandum which we regard as an essential first step: who would invest in a business whose profits were forecast to rise for 3 years, and then fall progressively from year 4? Or in a company whose sales forecast is based on a percentage of its productive capacity (regardless of any demand for the product)? Or in a business plan full of inconsistencies? Or in a producer of an undersea product named after a Greek goddess – of the earth? Or in a company whose product only gets its first mention on page 16 of a 17-page business plan?

•  (Well, curiously, some people have been known to which, we suspect, helps to explain why around 1 in 5 new businesses run out of cash in the first 12 months, requiring investors to commit further funds - or face insolvency)

•  VCL directors have seen all these examples - and have been unable to act for those companies which would not accept necessary change

•  Forecasts obviously cannot be certain, but they can be based on the most careful research and best known facts eg the market, competitors, costs, production, sourcing, and industry regulation

•  Whilst potential investors may not be familiar with a company's sector, they will be sufficiently experienced businessmen and businesswomen to sort a well thought out and well-researched proposal from the ill-prepared, the arrogant and the downright hopeless

•  Investors see a lot of proposals, and few are invested. VCL aims, by its rigorous procedure of selection and preparation of client companies, and choice of investors, to increase its client companies' chances of funding and of surviving to create significant shareholder value

•  A VCL information memorandum will usually take the following form:

•  Executive summary

•  Need for the product/ service

•  Product/ service offered

•  Market – buyers; size; market share; market drivers

•  Sales and route to market

•  Competition, including USP; competitors

•  Brief and relevant history and background

•  Management team, including background; skills

•  Business model – how does it make a profit? why does it make a profit? sales and costs drivers; effects of scale

•  Present status of operations; next steps; timetable for projected achievements

•  Financials – actual and forecast ; P&L, balance sheet; cashflow to exit and beyond; assumptions and rationale behind forecasts; with special attention to cashflow and maintaining solvency; and prediction of future profitability and thus value

•  Investment proposition – how much required; what for; how investment will contribute to high growth; equity/ debt; EIS; equity available; directorship

•  Exit – credible means and timing; investors' projected return

•  A VCL information memorandum will often be 12 pages or fewer, with attached financial projections and any necessary detail or evidence in a separate appendix