INSEAD Student Impact Fund:
Due Diligence

The goal of the Due Diligence team is to conduct thorough research on select follow-on companies, either focused on specific topics or through comprehensive general analysis, to help determine whether Loyal should make an additional investment in them.

Explore Training Sessions

Independent Study Project

Requirements:
50 hours of work/ student
Professor partnership
Grading of the final deliverable
Deliverable:
A 15-20 page due diligence slide deck on Company X consisting of an executive summary, company overview, investment thesis, market and competition analysis, business model and product description, team details, impact assessment, financial assessment, and valuation and deal terms. 

Project Timeline

This project should be completed in 60 days. Please see the ideal timeline below.

Task
Owner
Start Date
End Date
Milestone
Loyal aligns on DD memo shortlist
Cassidy Garbe
Day 1
Day 5
Send DD memo shortlist to students
Students review shortlist and rank preference
ISIF
Day 5
Day 10
Students provide preference ranking to Loyal
Loyal approaches company
Cassidy Garbe
Day 10
Day 14
Company accepts to work with students
Company prepares data room
Company
Day 14
Day 19
Introductions made between Students and Company and receive access to data room
Students prepare initial analysis and diligence questions for 1st call
ISIF
Day 19
Day 29
1st Company Intro Call
Prepare draft of investment memo
ISIF
Day 29
Day 39
1st draft provided to Loyal
Loyal reviews draft of investment memo
Loyal
Day 39
Day 44
Loyal partner provides comments on memo to students
Students address comments and set up 2nd call with company
ISIF
Day 44
Day 49
2nd call with Company to get answers on final diligence questions
Finalize memo
ISIF
Day 49
Day 54
Finalized memo sent to Loyal ahead of IC
Investment memo presentation and discussion with Loyal
ISIF
Day 55
Day 60
Presentation to Loyal investment team
  1. DD VP to liaise with LOYAL on potential targets prior to the start of the ISP period and determine which targets are most likely to be a relevant impact investment. LOYAL will then check which company is actually available for due diligence during the period the ISP should run.
  2. DD VP to assign pairs of students to Due Diligence Projects. The following tasks are the responsibilities of the student pair with oversight from the DD VP. 
  3. Reach out to professors (see List of ISP Professors Spreadsheet) to request ISP partnership.
  4. Complete ISP document (ISP Submission Form) with name of the professor, title of the project, short paragraph of project description (see Project Description Sample below), and course credit requested (0.5 or 1 credit (1 full credit recommended due to amount of work required)) and send the form to Student Life for approval, along with the email from the professor confirming their partnership.
  5. Determine a final deliverable deadline with Loyal and your professor. ***NB: a student can only do one ISP per period. If you wish to do another ISP, it is important that this one is completed the period before you begin another one.  
  6. Initial outside-in review of the company to get a basic understanding. Set up a call with the LOYAL business partner to the company to discuss the business model and understand what the key areas of concern / interest to LOYAL are.
  7. Data room access to be received from company. If no complete data room is available share an Information Request List (‘IRL’) with standard due diligence document requests [example to be added as appendix]
  8. First data room review to be performed by team and additional information requests to be shared if documents are missing.
  9. After receipt of all relevant documents the team should review all documents and prepare an initial questionnaire keeping in mind the topics in the suggested report structure below.
  10. Set-up initial call with the management team and share the questionnaire with the management team a few days / up to a week in advance of the meeting to give them time to prepare.
  11. Start processing information received during the call and from the data room review into the report (see structure below). This should lead to further follow-up questions to be shared with management.
  12. Determine if an expert call is needed if the target company has a highly technical solution or a solution that requires specific sector knowledge to truly understand. Liaise with the LOYAL network and the ISIF GEMBA network to source experts.
  13. Determine if a second call with management is needed to come to a first draft of the report.
  14. Share the draft report (which can still have unanswered questions) with LOYAL to get initial feedback.
  15. Based on LOYAL feedback determine if another call with management is needed to answer additional questions.
  16. Potential review round by GEMBA representatives and/or faculty.
  17. Rewrite and deliver final report to LOYAL and submit to professor for grading.

Slide Deck ~15-20 content pages should be sufficient, more than 25 pages is too much for the size of the investment. 

Based on the exact nature of the Due Diligence and the target some topics might not be as relevant or other topics might be relevant to be added. During the first call with the LOYAL business partner on the deal the DD team should agree on the scope of the report.

  1. Executive Summary: One-page that lays out the goal of the report, the key three to four findings, and informs the report structure.
  2. Company Overview: One-page overview of the main company stats including name, year of founding, no. of employees, founding team, LTM (last twelve months, or latest) revenue, HQ location, previous funding rounds. Potentially add main competitors, last and/or potential valuation.
  3.  Investment Thesis: One- or two- pager answering the question: why invest in this company? What are the key strengths that make this a good investment? What are some of the concerns / risks and how are these mitigated / de-risked? The rest of the report should essentially be a deeper dive into answering these questions.
  4. Market and Competition: 
    1. What does the overall market in which the company operates look like, what are the key trends?
    2. Describe the supply chain / value chain of the market, and the target company’s place therein? 
    3. Determine market size bottom-up and top-down and compare to management estimate. What drives the differences?
    4. Perform a competitor analysis. Who are the main competitors? How does the target company’s solution differ from theirs? What are other solutions for the problem the target is trying to solve?
    5. Who has the leadership position in the market and why?
  5. Business Model and Product:
    1. Describe the problem the company is trying to solve, their solution, and their products(s) in more detail. Detail the business model. What are the different revenue streams / solutions? 
    2. What are the unit economics and margins? How do the unit economics work?
    3. Discuss traction. What milestones where achieved? How much has revenue grown?
    4. Discuss key customers and customer commitments.
    5. Discuss other key business partners (suppliers etc.) if relevant.
    6. Describe the future timeline and planned milestones. What is the growth strategy?
  6. Team: Describe the background of the management team, what are their relevant professional and / or regional experiences? What is their story and motivation? Are all members full-time committed? Does the management team have skin in the game (i.e., did they put their own money into the firm?)
  7. Impact Assessment: Use the impact assessment team template to detail the positive and potential negative impact areas. What is the additionality of the company (i.e., would this problem not be solved without the company)?
  8. Financial Assessment:
    1. Show development of key historical financials with commentary where needed (sales growth / traction already being covered in the Business Model section).
    2. Present management case forecast financials including commentary on key underlying assumptions.
    3. Perform and present sensitivity analyses on the financial model. What is the downside case? What if certain milestones are not reached / take longer to reach? How far can the company fall short of their projection for the investment to still make a positive return?
  9. Valuation and Deal: 
    1. Based on the round that LOYAL is taking (500k, 1m, etc.) check with the LOYAL team what the range of the stake is they would normally take for such an investment. Do valuation expectations from management align with this range?
    2. Are there any specifics to the deal structure that need to be mentioned?

Suggested Report Structure

Slide Deck:
15-20 pages
*more than 25 pages is too many
Scope:
Based on the exact nature of the Due Diligence and the target some topics might not be as relevant or other topics might be relevant to be added. During the first call with the Loyal business partner on the deal the DD team should agree on the scope of the report.

Examples & Template

Structure Breakdown

Please see the suggested report structure to right. As a reminder, you can view the full document here.

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ISIF Training Program

Building a Fund

In this portion of the program, you'll learn to build a successful fund by mastering portfolio strategy, understanding VC economics, and conducting thorough due diligence. Topics include balancing asset allocation, crafting investment themes, and gaining an edge in investing; navigating fund-building, team compensation, and LP fundraising; and exploring deal terms and global investment considerations. Enhance your expertise in fund management and decision-making with actionable insights and strategies.

28
June
Due Diligence
11:00 am
EDT
DD Essentials: Cap Tables, Legal, Accounting, & Financial Modeling
Deal Terms
SAFEs, Notes, Preferred Shares, & Cross-Border Legal Work
Strategy
The Numbers, Asset Allocation, & Investment Themes
Team & Decisions
Team Dynamics: Psychology, Time, & Compensation
VC Economics
Building a Fund: Fundraising, Team, & Portfolio Strategy
Operations of a Fund

In this section of the training program, you'll explore fund operations, covering key areas like managing and governing funds, back office functions, deal sourcing and screening, follow-on funding strategies, and valuation and exit strategies. Gain essential skills and insights to navigate the complexities of fund management effectively.

4
Sept
Impact
6:30 pm
CET
How Can You Quantify Impact?
Back Office
Fund Setup, Negotiation, and Legal/Accounting Essentials
Deal Sourcing
Deal Flow, Evaluation, and Fund Marketing
Follow Ons
Signalling, Co-Investors, & Fundraising Strategies
Valuation & Exits
Acquisition, Secondary vs. Primary Exits, and Valuations
Managing a Fund
Founder Psychology, External Funding, and Startup Boards

Investments

The following list of companies represents a direct outcome of our strategic partnership with ISIF. Any company listed with traction or growth means they have progressed beyond the initial stage of funding due to their exceptional performance and potential. These investment showcase the effectiveness of our collaborative efforts with ISIF to identify, nurture, and support high-potential startups and ventures.

INSEAD Student Impact Fund

Frequently Asked Questions

Need help with something? Here are our most frequently asked questions.
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General

The INSEAD Student Impact Investing Club has partnered with Loyal VC, a fund run by INSEAD alumni that invests in INSEAD alumni, to give students experience with each of the elements of running an impact investment fund. The following Q&A give more information about each of the activities of the club. 

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Deal Sourcing

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Due Diligence

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Portfolio Management

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Impact Assessment

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Fundraising

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Disclaimer

The foregoing is a summary discussion of certain frequently asked questions relating to LVA’s advisory program and Advisor Agreement. This summary is provided for general informational purposes only, and may be subject to change. The information provided does not purport to address all matters relevant to Loyal, the advisory relationship or the LVA Advisor Agreement in its entirety, nor does it purport to constitute a sufficient basis for advisors to determine whether to enter into any agreement with LVA.

Furthermore, this summary is qualified in its entirety by the terms of the Advisor Agreement, does not provide any representations or warranties related to such agreements, is not legally binding and is not a substitute for a review of the full terms of the Advisor Agreement. While this summary is offered in good faith and in the hope that it may be of use to potential advisors, it is not guaranteed to be correct, up to date or suitable for any individual’s or company’s purpose. LVA and Loyal VC accept no liability in respect of this information or its use, and by using this summary you agree to hold LVA, Loyal VC and their affiliates free of any liability related to this summary.

Each company or individual is solely and independently responsible for investigating the facts relevant to its circumstances, including all matters addressed in this summary, and for determining what other sources of information to consult. Each company or individual is strongly urged to review the Advisor Agreement in detail, consult with their legal, financial, tax and other advisors, and ask any additional questions they may have of LVA prior to signing any agreements. In the event of any conflict or discrepancy between this summary and the terms of the Advisor Agreement, the terms of the Advisor Agreement shall prevail.