Screening is an important part of the TCA funding experience. Last year we had over 900 companies per year apply on our website for TCA funding. Approximately 25 percent of these companies make it to the screening process and 10 percent make it into due diligence. Although each year varies, we typically fund between ten and twenty new ventures per year. TCA consists of five networks: San Diego, Orange County, Los Angeles, Inland Empire, and Central Coast. Although each network operates slightly differently, the general process is as follows.
The first step in entering the TCA funding process is our online application. This process includes filling out an application with an overview of your company, including a summary of your financials. You'll also upload an investor PowerPoint presentation.
TCA staff and industry-specific investor panels perform an initial screening of the application to ensure it is within our scope of interest. If you pass the initial review stage, you will be invited to present at a pre-screening.
Each panel's prescreening process varies, but the general concept is an elevator pitch between 8 and 15 minutes, followed by Q&A. The prescreen presentation is given to a small group of TCA members who have domain expertise in your technology or market on a web conference call or at a separate meeting. The purpose of this pre-screening meeting is to determine if you are ready to present to the larger group, and give you constructive feedback to improve your presentation. You'll receive feedback, and if you pass the pre-screen, you'll be invited to present at a screening session.
Typically three to four companies present at a bi-monthly screening sessions. This consists of fifteen minutes of PowerPoint presentation and fifteen minutes of questions and answers. After each presentation, the entrepreneur is asked to leave the room while TCA members discuss whether there is enough interest to move forward into due diligence. The entrepreneur is then invited back into the room and given immediate feedback. Presentations are usually videotaped so that members who are not present can participate later online on our member-only secure website. The goal of a screening session is to get significant interest from TCA members and attract a "deal lead", who will coordinate the due diligence and be your point of contact throughout the due diligence and funding process.
A due diligence team is formed based on the number of interested members who signed up during the screening. A deal lead steps forward to coordinate the due diligence activities. Due diligence consists of verifying representations by the entrepreneur, speaking with customers, reviewing agreements and patents (if any), checking references, backgrounds, etc. The results of the due diligence process are posted on the TCA website (in the members-only section), and if the results are positive, the venture moves forward to a monthly lunch or dinner meeting, depending on the network.
Companies that pass due diligence present at monthly lunch/dinner meetings at each network, introduced by the "deal lead", who led the due diligence team. This allows the entrepreneurs to present to members who may not have seen their initial presentation. This is the final opportunity for entrepreneurs to garner enough interest from members to secure funding. Typically a signed term sheet is available when a company presents at this stage. Generally TCA members' terms of investment follow "standard" terms for financings developed over the years by VCs and other sophisticated investors.
Funding occurs after there has been enough interest generated through dinner meetings and internal communication from the entrepreneur and deal lead. Members invest in deals individually; however, everyone invests based upon the same term sheet. Thus, only a small percentage of members our members need to participate for the venture to secure funding. Typically, the minimum individual TCA member's investment amount is $25,000.