STEP 5: Obtain First IC Approval

b. As you will see in the Due Diligence Light - CDD Checklist, part of the baselining work that the team will conduct will be to establish a high-level gender-smart “score” or assessment for the pipeline company by checking the availability of gender-smart policies and practices. (Note to Reader: RENEW recommends a more robust and in-depth analysis be conducted during Stage 3: Due Diligence using a standardized framework, such as the SEAF Gender Equality Scorecard© Manual and the accompanying GES Calculation Sheet.) 3. RM leads the IM and SGS team to implement the Due Diligence Light - CDD Checklist (a blend of secondary and primary research on the deal): a. Activities and team members responsible added to tool. b. Save all interview notes, secondary research findings and reference materials in the firm’s appropriate shared drive folder. 4. SGS CFO and IM analyst develop draft financial model using the financial model template: a. SGS CFO and IM analysts develop a written narrative of the Financial Model, including the key assumptions and where to change those assumptions, so the IC can read and modify the model. 5. RM holds meeting with SIM, Legal, SGS CFO and IM analyst to design the structure and draft term sheet: a. Legal will select the template from the model term sheets folder. b. SGS CFO and IM analysts will be prepared to make real-time updates to the model. c. Multiple iterations between the terms and the financial model are necessary. 6. RM coordinates with the IM and SGS teams to write e-CIM: a. RM oversees most of the drafting. b. SGS CFO and IM analyst prepare the financial sections. c. Legal supports the drafting of the structure and terms. d. RM works to pull it all together in “one voice” and aligns the formatting and writing standards to comply with the [INV./FUND MANAGER NAME] style guide. e. RM sends the draft e-CIM, Financial Model and Term Sheet to the IIC. 7. RM holds IIC meeting to review and approve the draft e-CIM, Financial Model and Term

Sheet: a. IIC must get the information three days before the meeting. b. The RM should lead the meeting. c. The meeting should take one and a half to two hours.

d. The RM should seek conditional approval (i.e., approve if XYZ is reviewed and checks out) from the IIC. 8. RM works with the IM team to update the draft e-CIM, Financial Model and Term Sheet based on feedback from the IIC. 9. RM sends the final e-CIM to a quality control copyeditor (we suggest someone with native-level English proficiency). 10. RM recirculate final versions to the IIC via links and saves to the appropriate [FUND NAME] IC folders for [FUND NAME] IC approval. 11. Legal and RM prepare the final Term Sheet to share with the promoter.

Standards:

● The “brain trust” meeting must happen just after a deal has been promoted to the active pipeline to ensure the IIC, Legal, IM and SGS teams are clear about the investment and growth plan for the company. This meeting is used to guide the due diligence light (CDD) and reduce unnecessary analysis. Use the e-CIM template during the meeting for the agenda and populate sections of the e-CIM with assumptions and next steps to further explore in the CDD.

● Everyone must save all source files in company’s shared drive to meet any applicable record keeping requirements.

● Financial Model assumptions are backed by research.

● Legal must approve the term sheet before sharing externally.

● The RM owns the e-CIM and all deliverables.

● The RM must use the [INV./FUND MANAGER NAME] style and formatting guide when preparing the e-CIM to avoid lengthy formatting and copyediting iterations that could slow the process. Require all new members of the IM team take basic writing classes, and design and use a training for the team on how to develop key external documents.

● All IM and SGS team members must support the RM to hit the targets.

STEP 4: NEGOTIATE & SIGN TERM SHEET

This is a critical and emotional stage of the engagement with the promoter and should be handled with care. Please carefully review the standards section before beginning any negotiations with the promoter.

Outcomes:

● To obtain to a signed Term Sheet by the promoter for [FUND NAME] IC approval.

● To design a win-win solution that all parties are excited about.

● To advance to a go/no-go on the Term Sheet in the most effective manner possible and maintaining a strong working relationship with the promoter.

Process:

1. RM meets with the IIC, SIM and Legal to prepare for the term sheet negotiation meeting with the promoter: a. Dry run the meeting internally with the IM team. b. Select roles and responsibilities for the meeting. c. The RM should be the lead communicator during the meeting. d. Limit the number of [INV./FUND MANAGER NAME] members in the room – this can intimidate the promoter. 2. RM schedules a Term Sheet review meeting with the promoter; preferably do this in person. 3. RM leads negotiations with the promoter over two to three meetings, if necessary (see standards below). 4. RM obtains the promoter’s signature on the Term Sheet (Remember: [INV./FUND MANAGER NAME] must not sign the Term Sheet until External IC approval is obtained): a. Celebrate the moment when the Term Sheet is signed – toast with a drink or coffee or sweets (we’re engaged!). 5. If successful, the RM saves the signed Term Sheet to the appropriate firm’s shared drive folder and emails the link to the IIC: a. If negotiations fail, the RM schedules a “Hotwash” meeting with the IIC, IM and Legal team to review lessons learned that will be incorporated into this SOP. 6. RM sends a follow up email to the promoter with the signed Term Sheet and outlines the next steps – see due diligence. 7. RM works with the SGS CFO, Investment Analyst, and Legal to update the Financial Model and e-CIM to reflect the agreed terms. 8. RM saves all final files in the [FUND NAME] IC folder for the [FUND NAME] IC meeting and coordinates with Stakeholder Engagement & Innovation Unit to inform the interested investors on next steps.

Standards:

● Draft terms should be prepared three weeks after a deal has been approved for active pipeline.