Tulane Ventures believes that due diligence should not be a black box. At the same time, it is important that founders do the necessary research on the Tulane Seed Fund and investment criteria to ensure they meet the parameters prior to applying for funding.

Below we have laid out the investment process:

  • A woman in a white lab coat is working with scientific equipment, including a laser and a dual computer monitor, in a laboratory with red lighting, focusing intently on her task.

    Step 1:

    The Tulane Ventures team reviews the investment deck and confirms that the company meets the eligibility criteria. If yes, then the Tulane Ventures team moves to step 2.

  • A person in motion standing next to a large server rack with illuminated cables in a data center.

    Step 2:

    The Tulane Ventures team will reach out to set up a 30-minute slot to present in-person or via Zoom, based on the entrepreneur’s preference. We kindly remind the entrepreneur that this is an overview meeting. The Tulane Ventures team is looking to get to know you, the business, the stage of the company, and the growth opportunity. Respect the 30-minute slot.

  • A hand holding a syringe or medical injection device.

    Step 3:

    The Tulane Ventures team will review the entrepreneur’s materials and gather third-party information before deciding whether they would like to move into due diligence. The goal is to notify entrepreneurs within 72 hours of the meeting.

  • Data center server racks filled with computer hardware, with green and blue LED lights, and a person walking past on the right.

    Step 4:

    If the Tulane Ventures team decides to enter due diligence, they will provide the entrepreneur with a document with all the required information for a smooth and detailed process. The better prepared the entrepreneur is, the quicker and smoother the process will be.

A man and woman sitting at a table on a balcony outdoors, engaged in conversation, with a railing and buildings in the background.

  • The TV team will review historical and projected revenues, costs, margins, growth assumptions, revenue concentration, and so on. Having an intuitive and easy-to-follow model always helps.

  • They will dive into all of the assumptions surrounding your sales process to determine what drives your numbers. They go into these meetings with the understanding that you know your business best and that they are here to offer insight and suggestions based on their vantage point.

  • True market size numbers are hard to come by. They are not looking for a top-down data point for “total IT spend in X industry”. Segment your market fully and calculate every sales dollar you could feasibly close based on the total number of potential customers and total revenue you could generate. Do this both for your current products as well as for future product development/market opportunities. In conducting this analysis, we are looking both for business resilience with regard to your current in-market product as well as the “big vision” that funding and growth would enable.

  • Clearly map out your market position and unique value proposition relative to your competition. They often find that competitive sets are not fully identified.

  • Cap table, copies of convertible notes, debt, etc. Far too often, They meet founders with multiple layers of stacked notes and limited understanding of everyone’s true stake. They will work with you on cleaning up your cap table, understanding the founders’ ownership, adjusting the option pool, and conducting scenario analysis for current/future rounds. Their top priorities are ensuring that founders are probably incentivized & that the company is as attractive as possible for future investors. This topic includes discussion of current round terms. Are you raising the right amount based on your operating plan? What are the milestones you need to reach to trigger your next financing event? Does the valuation you want make sense given the stage of your company, and how does it align with your projected growth trajectory?

Step 5:

The Tulane Ventures team will schedule a meeting/Zoom with the focus on the following:

Close-up of a person's hands organizing fingerprint cards labeled with the word 'maurescue' on a table.

Step 6:

Once the Tulane Ventures team has gotten comfortable with the above, they will start including others in the process as well. They will reach out to the Tulane community and network. While conducting these calls, we will make a few more document requests on:

  • Top customers, churned customers, etc.

  • Roadmap, development costs, execution risks

  • Customers, existing investors, and potential target co-investors. We will hold off on calling any of your customers until the very end. Toward the end of this second stage, we will begin putting together the investment syndicate.

Two individuals, a man and a woman, are attaching papers to a whiteboard in a classroom or office setting, with the man in a red and black striped shirt and the woman in glasses and a blue printed shirt.

Step 7:

This is the home stretch! The final items are tech due diligence, customer reference calls, and some more checklist documents.

  • Infrastructure, tech stack, security, tools, etc.

  • The timing varies a bit case by case, but typically we will formally issue a term sheet post-tech due diligence. We prefer leading, and we are open to co-leading or following if that makes the most sense for a given company. If we have not yet finalized the investor group, we will focus all of our efforts on that now.

  • Senior executive team & customer reference calls

  • Trademarks, litigation, tax returns, incorporation docs, etc.

Step 8:

We plan to use, and encourage other investors as well, the Y Combinator Safe Note. At this stage of investing, there is no need to have expensive legal costs for early financing. This legal agreement is well accepted across the country by early-stage companies and investors. 

Financing Paperwork

While this may all seem overwhelming on paper, it is a highly collaborative and engaging process. The most important parts for the Tulane Ventures team are deeply getting to know the founders and building lasting relationships with them and the co-investors in the round. They can make an investment decision in as little as a few weeks, but seeing founders execute and showing them the way we work are critical to setting a strong relationship foundation. Most of all, they enjoy rolling their sleeves up with founders and leveraging the Tulane and the New Orleans Community.