Please rip apart my PE/VC information Memorandum (attached)
Hi all, we are listing a SPAC that focuses 100% on Mining companies. The model is simply a listed PE/VC firm. Find attached our Memorandum and rip me apart like a Monkey. Tell me the fund is terrible and advise me where you can, I really respect the wealth of experience in this form.
In the last section I focus on showing the effect of lower commodity prices to prove that my portfolio is resilient.
P.S: I’m an Actuary moving into Finance.
Any takers?
30% founder shares on first QA (probably pre-production, no less) and allowed to sell before 12 months if the price rises 25%? I'm not too familiar with how these are structured where you are from but this sounds like a perfect set up for a pump and dump.
If the price rises by 25% this means management is doing a good job? In the country where we are based this is a very tough target because of the liquidity levels.
The founder shares are to compensate management for the work they have done already
What do you mean by QA?
Competitive advantage*
Nicely spotted not “Competitive Advantage”, English is my 10th language. Anything on the content?
10th language? wtf?
You said "rip apart" so...
The random lightbulb clip art adds nothing to the memo. The "Life Cycle of a Mine" chart has a big ass lion in the back, which tells me it was stolen from somewhere. You need to cite it as a source.
How is Botswana "arguably" the largest diamond producer in the world? Someone, somewhere, must have made an estimate of where Botswana stands in the ranking of world producers - cite an actual statistic to sound more credible.
Need to add sources more generally to all the factual statements you are making such as the size and wealth of certain projects.
Is it spelled Botswana or Batswana? The memo is not consistent.
You list a bunch of other funds but no comments on how they are structured, the various features, capital structure target, asset classes, etc. Just adding their logos on a page is not enough - show more information about them and perhaps discuss how much they have invested in local economies and in what projects.
The chart in your Butterfly Model is misleading - the arrows show dividends going from the mines to the investors, but aren't they really going to the management company (AM) which deducts fees and then makes distributions to investors?
Page 22 refers to a "table below" showing distributions but I don't see that table anywhere...
You need to add much more of a discussion the fee structure (management versus performance fees), the regulatory landscape, an executive summary, worked examples of fund outcomes (downside, base, upside along with fee calculations and gross versus net returns). You also probably need to add a lot more information around the potential risks and all the ways in which this thing could blow up and how you plan to address them.
Overall, it's not terrible for a small emerging markets startup fund. But this is clearly not "Wall Street" quality, if you know what I mean. You don't come from a banking background though so that's understandable - keep at it and the effort will pay off.
One final thought - why are you structuring this as a SPAC and not something else? What other structures could work here? What is it about the Botswana SPAC framework that makes it different from the U.S. framework and how does that impact your fund? Probably worth discussing in the memo (although if the audience is already familiar with this, a brief mention on why a SPAC would be better than other structures for you should suffice)
Thanks for ripping me apart. Just threw you with Bananas
America and Americans same as Botswana and Batswana
The chart in your Butterfly Model is misleading - the arrows show dividends going from the mines to the investors, but aren't they really going to the management company (AM) which deducts fees and then makes distributions to investors?
In terms of the fees we have only management fees, I agree that we need to add performance fees although we still own a percentage of the Fund i.e the 30%
The reason we doing it as a SPAC is that we are moving in to settle as a PE Firm, so we will use the Funds as our LP. The exchange BSE does not have any regulation on SPACs instead they have what they call the Venture Board which allows startups to list so that's where we will be listed.
Will definitely add more details on the prospectus
What do you think about having included a low commodity prices scenario...indicating downside and robustness henceforth?
Some immediate questions come to mind:
How do you view the attachment here?
Can't find memo
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