Our Fund Administrator reviews all applications and screens out companies that are outside of our geographic area (roughly a day’s drive from the Raleigh/Durham area) or our areas of expertise and interest. For example, we do not invest in pharmaceutical companies because they require too much capital, and we do not invest in restaurants or consulting firms as they typically do not have the growth and margins we prefer. Additionally, TAP does not typically invest in businesses with pre-money valuations in excess of $3 million.
Next, our Screening Committee reviews your application in Gust and recommends the Fund Administrator decline or schedule your management team to present to TAP’s Executive Committee. The Executive Committee (EC) meets monthly and sees two or three presentations. Presentations last 12 minutes and Q&A lasts an additional 5 – 8 minutes. Following this meeting, the EC will vote to decline your application, watch your company for progress or invite you to present at the monthly TAP Member Meeting.
The format at the Member Meeting is identical to the EC meeting – 12 minutes to present and 5 – 8 minutes of Q&A. After your presentation, the members will vote to decline your application, watch your company for progress or initiate a due diligence process.
Next, our volunteer Due Diligence (DD) team will send you a list of materials they would like to see, so be prepared! You will need to provide historical and projected financials, board minutes, contracts, employment agreements and much more. The faster you respond, the faster the DD team can get to work.
Due diligence can take between 30 days and 120 days, depending on how quickly you can provide information and respond to questions as well as on how much time our volunteers can devote to the process and the complexity of your business. Once the process is complete, the DD team makes a recommendation to the members who vote on whether to accept the recommendation to invest and the amount of investment.
When TAP makes an investment, our members invest as a group, so we require a majority of interest in our fund in order to make an investment. However, members sometimes request to make a sidecar investment of an additional amount, which will increase the total amount TAP wishes to invest in a business. If the DD team does not recommend an investment, members may use TAP’s DD and make investments individually, if the company allows.
Once an investment has been approved, it takes only two business days to fund the investment.