The Diagnostics Rating determines if we want to talk with the portfolio-company candidate or not. There’s a line of demarcation within the Artificial Intelligence (AI) of Initial Due Diligence Questionnaire that determines, their Diagnostics Rating. Depending on their Diagnostics Rating, the system automatically sends them to the Block & Tackle or the Friction Free landing page. If they land in Block & Tackle we want to meet with them on a video conference call, but they’re further filtered with a standard conference call first. If not, they fall into the Friction Free area and they can begin to improve their diagnostics rating. They accomplish this by completing their securities offering document with a marketable deal structure, with the use of Financial Architect™, the engine within the Corporate Engineering Conservatory.™
To generate a Diagnostics Rating, a principal of the portfolio-company candidate must answer the questions on the Initial Due Diligence Questionnaire and upload the requested documents. The Diagnostics Rating is derived from the questions and the AI, to determine the probability of capital attainment, through a securities offering, based on the stage and type of company. From this point, our Investment Policy Committee will determine if we have an interest in engaging them in our full service Block & Tackle arena based on other factors.
Make sure the principal of the portfolio-company candidate understands that honesty is the only option here. Their answers may be reflected in a securities offering document and any misrepresentation could be construed as securities fraud, a criminal offense. You too must take precautions, as you cannot answer questions on behalf of the portfolio-company candidate for the same reasons. It is your responsibility to coach them through this process, but to deflect potential claims securities fraud on yourself, never ever engage in any part of the completion of the questionnaire or any other action within the Capital Access Portal.
To properly assess a portfolio-company candidate at the very beginning, one must understand those questions on the Initial Due Diligence Questionnaire.
The following are illustrations of the questions only. The actual Initial Due Diligence Questionnaire is formatted in HTML.
COMPANY DATA INPUT
Start-up is defined as Idea to Pre-Revenue.
Early Stage is defined as Post Revenue but Pre-Profit.
Later & Divestiture Stage are defined as Post-Profit.
The other information can easily be gathered from the current financial statements – 6 months maximum age of current financial statements.
The information should be readily available and areas are explained within the actual Initial Due Diligence Review. The one thing you should be aware of is the list of Five (5) Critical Disclosures (Q: How Many Mgmt. Team Members CANNOT affirm to all these disclosures?) within a securities offering document that Management must affirm. They are as follows:
1 _______No Insolvency. Within the past five years (or longer if material), no officer, director or key person (or the parent company) has filed a petition for bankruptcy, receivership, or similar insolvency proceedings, nor was in a similar capacity of another business entity that was subject to bankruptcy, receivership, or similar insolvency proceedings.
2 _______No Criminal Background. Excluding traffic and other minor violations, no Managing Member or key person (or the parent company) has been named as a subject of a pending criminal proceeding or convicted in a criminal proceeding.
3 _______No Civil Litigation. Within the past five years the parent company, no Managing Member or key person (or the parent company) has been named as a subject of a court order, judgment or decree related to his or her involvement in any type of business, securities or banking activity. In addition, no officer, director or key person has been threatened with civil action in any type of business, securities or banking activity.
4 _______No Administrative Proceedings. Within the past five years no Managing Member or key person (or the parent company) has been imposed with an administrative finding, order, decree, or sanction by any government agency, administrative agency, or administrative court. In addition, no officer, director of key person has been the subject of or threatened by any pending administrative proceeding related to his or her involvement with any type of business, securities or banking activity.
5 _______No Self-Regulatory Proceedings. Within the past five years no Managing Member or key person (or the parent company) has been imposed with a sanction by any self-regulatory agency or authority related to his or her involvement with any type of business, securities or banking activity. In addition, no officer, director or key person is the subject of or threatened by any regulatory proceeding related to his or her involvement with any type of business, securities or banking activity.
Another thing you should be aware of the list of Eleven (11) Capital Markets Experience Level (Q: What’s the Mgmt. Team’s level of understanding of the Capital Markets?)
ENTER ON A SCALE OF 1 TO 10 is progressive in nature.
For instance, a 5 assumes has met all previous lower number elements.
0 = has very little, if any, knowledge or experience with the U.S. capital markets.
1 = has dealt with credit cards only.
2 = has dealt with Commercial Banks only.
3 = has tried soliciting a business plan to angel groups with no results.
4 = has solicited a business plan to angel groups with some positive results.
5 = has tried soliciting a business plan to VC/PE with no results.
6 = has tried soliciting a business plan to Broker Dealer with no results.
7 = has solicited a business plan/PPM to Broker Dealer with some positive results.
8 = has solicited a business plan/PPM to VC/PE with some positive results.
9 = has solicited a PPM to investors with some positive results.
10 = has solicited a PPM to investors with great results.
11 = fully understands the US capital markets
EXECUTION RESPONSIBILITIES & LIMITATIONS
To further the integrity of our Acquisitions sales force, we require a high standard of excellent and absolute professionalism in all our Managing Directors and Managing Enterprises. In addition, we also require minimum monthly production numbers, based on the longevity of a Managing Director or Managing Enterprise, as illustrated in the following schedule:
- One hundred (100) CEC Monthly Subscriptions acquired and secured through our CEC be the end of the 1st full Calendar Year of engagement and beyond.
- Twenty (20) Portfolio companies acquired and secured through our FRICTION FREE system within the 1st full Calendar Year of engagement.
- Two (2) Portfolio companies acquired and secured through our BLOCK & TACKLE system within the 1st full Year of engagement, as long as Block & Tackle exists. Block and Tackle will be phased out as the CEC FRICTION FREE system expands.
NOTE: Managing Directors or Managing Enterprises that join the firm within a “less than full” Calendar Quarter will not be subjected to these minimums during that Calendar Quarter, but starting with their first full Calendar Quarter.
Please see protocols and procedures posted within the Managing Director’s Private “Back-Office” Portal.
Please see protocols and procedures posted within the Corporate Engineering Conservatory™ and Managing Director’s Private “Back-Office” Portal. NOTE: ALL REPORTING IS TO BE DONE ONLINE WITHIN YOUR PORTAL. ANY EMAIL CORRESPONDENCE CONCERNING YOUR POSITION WITH COMMONWEALTH CAPITAL IS TO BE SENT AND RECEIVED EXCLUSIVELY WITH YOUR COMMONWEALTHCAPITAL.COM EMAIL ADDRESS
ORIENTATION – REQUIRED READING
- MICRO VIEW – HOW WE ENGAGE AND ENGINEER start-up and early stage companies, into PORTFOLIO COMPANIES read our…
- All webpages at CommonwealthCapital.com
- Taking and passing the Secrets of Wall St. Examination to receive hot leads generated “In-House.” See Managing Director or Managing Enterprise Dashboards
The balance of 13 chapters is suggested but not required.
Below, you’ll find the Achieving & Accelerating Diagnostics Ratings quiz. To progress to the next lesson you must correctly answer all of the questions that follow. If you make any mistakes, you can retake the quiz once complete.