COLLABORATION MODEL
SCORING AND RECOMMENDATIONS

	Scoring	Weight	How to ensure Success and Mitigate Risk
Strategic	Shared objectives		Establish a mutually beneficial arrangement consisting of a well-articulated future business relationship with alignment of entrepreneurs and venture capital investors to accelerate growth through a capital injection and generate high investment returns for all stakeholders
	Clearly defined collaboration scope		Design, negotiate and agree fair and balanced funding terms with a limited 5 to 7 years investment and exit horizon, permitting the entrepreneurs and other stakeholders to grow the business during such period
	Freedom to operate		Structure acceptable level of VC control over the scope and funding of the business of the startup, taking into account that financial investors will typically not restrict a startup’s freedom other than in respect of a material change of the scope of business
	Risk sharing		Take a balanced approach to venture capital investments, with appropriate risk allocation between entrepreneurs and employees on the one hand and the venture capital providers on the other hand
	Worst Case planning		Build strong interpersonal ties and trust between all stakeholders, taking into account that veto rights and leaver arrangements are imperfect solutions to deal with disagreements and other disputes between venture capital investors, entrepreneurs and senior management
	Senior Executive Support		Ensure senior executive support from all stakeholders by ensuring that the key decisionmakers are represented in the appropriate governance structures to ensure swift and efficient alignment and decision making
Business	Business Value proposition		Accelerate growth through a venture capital injection and generate high investment returns for all shareholders of the startup
	Due diligence		Perform adequate diligence on the reputation of the venture capital investors through reference checks with other portfolio companies of the investor Prepare extensively for due diligence to be performed by a venture capital firm prior to making the investment
	Optimal legal/ business structure		Design, structure and negotiate the Investment and shareholders’ agreement and other customary transaction documentation, determining rights and obligations of venture capital investors, entrepreneurs and other shareholders in respect of the capital structure and governance of the startup
	Partnering metrics		Think through and design fair and appropriate financial terms for all stakeholders ensuring alignment and motivation to generate high investment returns, which is the key metric to measure success of venture capital investments
	Rewards/ penalties		Avoid unbalanced arrangements which do not appropriately allocate risk between the stakeholders as investors and entrepreneurs are strongly inter-dependent in the short and long term
Operational	Decision-making processes		Design and negotiate appropriate governance changes and mechanisms due to the entry of one or more venture capital investors, giving a certain level of supervisory control to the venture capital investors while at the same time not stifling or inhibiting entrepreneurship
	Communication		Ensure continuous and transparent communication by senior management to investors on the state and evolution of the business to generate long-term trust and efficient decision-making
	Quality checkpoints and review		Except in the event of milestone-based funding arrangements (typical in the life science sector), take into account relatively few quality checkpoints other than mandatory decision-making procedures and timely communication on potential issues
	Change management		Ensure fair and balanced veto rights for venture capital investors and good leaver/bad leaver termination rights, with the exercise of such rights only to be used as last resort in view of their likely value destroying effect
	Issue Escalation Mechanisms		Ensure efficient issue escalation mechanisms to deal with fundamental disagreements between entrepreneurs and investors, or between investors, which often lead to an exit of the founders or a sale of the startup
Cultural	Collaborative mindset		Take a balanced approach to venture capital investments to ensure a collaborative mindset, with appropriate risk allocation between entrepreneurs and employees on the one hand, and the venture capital providers on the other hand
	Dedicated alliance managers		Ensure in a venture capital context that key decision makers of most important stakeholders are represented in the appropriate governance levels to ensure swift and efficient alignment and decision making
	Joint decision-making processes		Design and negotiate sophisticated governance arrangements to ensure decisions take into account the interests of all stakeholders, with a certain level of control combined with sufficient freedom to ensure agile entrepreneurship
	Appropriate incentives		Take into account the interests of investors, entrepreneurs and other insiders when designing checks and balances from a risk allocation and governance to ensure alignment in good and bad times