| Evaluate The Opportunity |
Yes |
No |
| I have listed and defined my personal
objectives for this investment. |
 |
|
| I know my probable return on investment
(ROI) |
|
|
| I know the payback period for
the investment. |
|
|
| I have discussed this project
with other current and potential investors. |
|
|
| I know how long this opportunity
has been available. |
|
|
| I understand the financial plan
and believe the assumptions and projections are reasonable.
If No, has the plan been reviewed by independent professional
advisors? |
|
|
| Is the marketing plan realistic? |
|
|
| I understand when the business
is expected to become profitable. |
|
|
| I know when I can expect a return
on my investment in interest or dividends. |
|
|
| I know how and when I will get
my capital back. |
|
|
| If I am purchasing equity, I know
what I am purchasing (common shares, preferred shares) |
|
|
| I know if there are warrants or
share options attached. |
|
|
| If I am purchasing debt, I know
if it is subordinated debt? Convertible debt? |
|
|
| Evaluate The Risk |
Yes |
No |
| I know how much I could lose and
the risk of loss on this investment. |
|
|
| If the project involves development
of a new product, process or other technical innovation, is
there independent confirmation that it works? |
|
|
| All the regulatory requirements
have been met. (Environmental, zoning, patent searches, etc.) |
|
|
| I know what the funds raised will
be used for. |
|
|
| Is the business operational now? |
|
|
| If it is losing money, I know
the burn rate. |
|
|
| I know how much my investment
will be diluted as a result of the founders getting an interest
for their sweat equity. |
|
|
| I think the founders have invested
an appropriate amount of cash in the project. |
|
|
| I know what level of involvement
is expected of me. |
|
|
| If I want to be on the board of
directors, am I entitled to representation? |
|
|
| I understand the legal structure
of the investment. If No, I have had professional advice on
the subscription form or prospectus. |
|
|
| I know if some or all of my investment
is secured by assets. |
|
|
| Could I be legally bound to put
up more money in the future? |
|
|
| I understand the legal structure
of the venture and the significance of the structure on my current
and future risks. |
|
|
| Is adequate insurance in place
for assets, key personnel and directors? |
|
|
| Are all tax filings (income tax,
payroll, GST, etc.) Up to date and have these filings and related
assessments been reviewed? |
|
|
| Evaluate The People |
Yes |
No |
| I know and trust the people who
are making the sales pitch to me. Or I have confirmed their
reputation with credible third parties. |
|
|
| I know what and how the promoters
are being paid (if anything). |
|
|
| I know the history of the key
implementers of the business plan. |
|
|
| I know the terms of employment,
contractual and salary agreements for the key personnel. |
|
|
| I know the reputations of the
current shareholders, officers and directors and key professionals
to the project. |
|
|
| Has a lawyer conducted corporate
and personal searches on those involved in the opportunity? |
|
|
Checklist For Investment Evaluation