Axiomate Delivering Simple Truths about Business Investment Risk and Exposure
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Who We Serve - Venture Capitalists
For the venture capitalist or angel investor, we offer our traditional verification services tailored to complement or augment your own due diligence process. Our goal is to prepare you as an effective board member by identifying and diagnosing key operational deficiencies of the business. You will receive our assistance in helping management correct infrastructure problems before they compromise the window of opportunity. You can also call upon Axiomate for subject matter expertise in the areas of product development and sales and marketing - particularly management and tactics.

As prior executives of venture-funded companies, both successful and troubled, we have raised money from venture capital groups by understanding the process - including the distinction between management motivations and techniques and those of the financing party. We also understand why seemingly good deals go bad!

Specified Services - Investor Due Diligence

Axiomate continually strives to tailor its services to the specific exposures of the engagement. As companies mature and their specific financing needs adjust, the underlying due diligence services that must be performed to understand the investment risk also change. This document outlines the scope of Axiomate's services at various stages of investment.

Seed Capital

Early to Mid-Stage (1st and 2nd Round Financings)

Post-Investment - Under-Performing Portfolio Companies

Post-Investment - Services for the Portfolio Company

Seed Capital

Axiomate's due diligence team helps you understand the viability of the business plan. We offer a combination of services that collectively work to provide reasonable assurance that the investment has merit.

Due to our rich experience in strategic planning, forecasting, market research, business plan drafting and execution, we are well suited to thoroughly dissect any business plan. We understand management's commitment to the challenges of implementation. We can help you assess those challenges with the following specific services:

1. We scrutinize the financial model. We work to understand its axioms, assumptions, "leaps of faith" and calculations. We can then help to establish metrics and milestones that can be used by the board and management team to gauge business progress.

2. We can review market size, dynamics and strategies. Our market research team can validate the market assertions within the plan including the size of the market, the viability of distribution and pricing strategies, and the strength of existing and potential strategic partnerships. We typically find that the sales and marketing disciplines are to receive a large portion of the use of proceeds, yet the specific assumptions behind the plan are the least analyzed. We can identify, quantify and seal-off the deep hole of the marketing budgets that consumes far too many investments.

3. We can validate exit strategies by examining acquisition trends within the industry. We can help identify primary and secondary suitors, and current prices paid, while further identifying parallels and inconsistencies between the existing strategic directions of such with those of the seed company.

4. We can complete background checks of the management team to validate education, job history and accomplishment disclosures set forth on resumes. We can perform a thorough background check for hidden financial or legal issues.

5. We can perform an early cultural assessment to establish a cultural projection based simply upon the values and goals of the existing management team. We can identify early problems in the team building of the core group.

Axiomate works with the investor to match the specific services to the agreed upon engagement exposures. Axiomate recommends that each of these areas be sufficiently considered by the investor prior to funding.

We also provide subject matter expertise in the areas of manufacturing, retail, distribution, healthcare, software and Internet development, (tangible) product engineering and development, and healthcare. We have resources with expertise in technology, marketing and operations within these markets. Review the specific skills of our associates.

Early to Mid-Stage (1st and 2nd Round Financings)

As the business matures and seeks further development or expansion capital, due diligence becomes more complex. Mature companies have operating histories, good and bad, that must be well understood before any investment is made. These operating histories include customer successes and failures; the development of reputations within the industry as well as with customers, employees, prospective employees, banks, vendors, creditors and investors; the definition of the work culture, and a deep investment in technology. This experience and legacy work to either facilitate or impede the future of the company.

For rounds beyond the seed, Axiomate's due diligence team helps you understand the business' infrastructure and reputation. We seek to identify and understand the opportunities and the threats hidden within the business history. Our services work in combination to understand the kind of future the Company builds from its history.

1. We examine the infrastructure in each functional area of the business to establish discernible progress on the existing business plan as well as identify management's upcoming challenges:

a. Finance We perform an extensive review of the finances of the target. The work includes developing a thorough understanding of all key accounts on a working trial balance with a comprehensive trend analysis of the numbers. We validate the existence and values of all key business' assets and liabilities. Our work is not a traditional audit, but rather a comprehensive understanding of the interrelation of numbers to business operations. For example, we might crosscheck old accounts with customer service histories and sales pipelines so as to gauge the extent of that various departments within the organization are communicating (Is sales spending time on a prospect that is on credit hold or is unhappy with the last installation?). We look for evidence of hidden liabilities, including the possibility of current or impending legal action. We also review the adequacy and completeness of the company's internal accounting systems, reporting, cash management and internal control procedures. We study the IT infrastructure and understand the information systems plan within the context of the business vision.

b. Operations We believe the way the business conducts its day-to-day operations (its processes of obtaining, creating, delivering, installing and servicing its products or services) to be one of the most telling aspects of a well-run, sustainable business. The fissures of business failure are most usually evident in this area. In particular, we study the manner in which a business develops, maintains, protects and continuously improves its core processes.

c. Sales and Marketing We find that the forecasts of many early-stage companies earmark a large portion of the proceeds for sales and marketing. We also repeatedly find that the fundamentals and assumptions in this area are the least developed aspect of the business plan. As a consequence, this area often becomes the "hole" where investment capital vanishes. We have a disciplined process whereby we can challenge both management's assumptions and depth of thought in targeting customers, building brand and developing channels. We will help identify and close these holes in the marketing budget.

Axiomate's marketing specialists are versed in market research. Although our market research capabilities are, in general, designed to support our business assessments and valuations, we can provide a full range of market research services. We can conduct a variety of market research projects from start to finish, and deliver usable market research customized to meet your needs (see Marketing Services Profile.)

d. Technology We often find that technology companies are well positioned with their current revision of technology, but not yet poised to efficiently deliver the next generation of products. Many young companies lack the skills for planning, program management, product support or staffing (recruiting, development and retention) any or all of which can seriously impede the timely delivery of subsequent products and compromise the window of opportunity. Axiomate's staff includes four experts with significant experience in untangling failed technology development projects and four specialists who have successfully managed first and second generation projects in emerging companies. We can identify such problems in the technology development group and provide you with ready-to-implement remedies. We can provide you with a thorough assessment of the value, durability and uniqueness of the business' intellectual property.

2. We scrutinize the business culture. We work to understand the fundamental value system within the organization. This helps us ascertain the organizational drive, including those areas of importance that lack importance and definitions of success and failure.

3. We work to understand the business' key relationships with its current and former customers, suppliers, employees and marketing partners.

Axiomate has over fifteen former entrepreneurs and executives that work on 1st and 2nd stage assessment projects. We match the experience set of the associate to the risks and needs of the business in order to provide you with only relevant, high-impact analysis.

Post-Investment - Under-Performing Portfolio Companies

Our due diligence methodologies are readily applied to portfolio companies that do not appear to be delivering the results you had expected. We work with you to continuously monitor management's progress either discretely or in conjunction with the management team. The procedure is much the same as the investor due diligence, except that we enter the process with the presumption that management has not been true to its business plan. This presumption allows us to concentrate our activities on identifying areas that are deficient of management's attention. We typically may find a correlation between the shortcomings of a business and the lack of management focus. In all cases, we will not only identify the problem, but will provide you with a meaningful prescription to address the ill.

Post-Investment - Services for the Portfolio Company

Our due diligence services will support your portfolio companies as they begin to make strategic acquisitions and alliances on their own. We work with management in planning the due diligence; including training their personnel to ensure they become vital members of the due diligence team and create an opportunity for skill and knowledge transfer. We also assist companies, buyers and sellers with deal structure, negotiation, and the packaging of the business for sale. Similar to the sale of a residence, companies that organize their affairs and clean their ledgers before entering into transaction discussions will universally command a top price at time of sale.

For more information, please contact:

Eric Edwards Dan Ward
303.220.5380 303.370.0002

Copyright Axiomate Phone: 303-220-5380