Elevate Ventures Pre-Seed Fund

Investment Decision Process

Step One: Deal Sponsorship

Every investment opportunity must have a deal sponsor. Deal sponsors will often be an Elevate

investment vice president. Members of the Elevate Ventures Investment Committee and the Head of Platform can also operate as a deal sponsor. This same group makes up voting members of the Pre-Seed Investment Committee.

Once a deal sponsor deems a company ready for investment consideration, where the company is pursuing an innovation-driven business model and a Pre-Seed investment of $100K or less would be sufficient to attract outside investors, the deal sponsor will share the company’s pitch deck, business overview form, and any other supporting material with the Pre-Seed Investment Committee and schedule a company presentation.

Step Two: Presentation Stage

A virtual presentation will be scheduled where the company will provide a 10-minute pitch and 10 minutes of Q&A to a quorum of five or more Pre-Seed Investment Committee members. Following this, the committee will have 10 minutes for deliberation and vote. Votes will be collected using an evaluation rubric. It is anticipated that adjustments to the timing, pitch format, and voting rubric will evolve as best practices are learned.

Investment decisions require a quorum of five voting members and a two-thirds vote in favor of a company to move to the next step. A reasonable next step could be for the company and deal sponsor to obtain additional information and for a vote to take place during the following committee meeting.

For deep tech companies, it is expected that a deal sponsor has done satisfactory levels of diligence on the technical merit of the company, where the voting committee is voting on the quality of the business model, not on the technology. For example, the committee is not voting on if a therapy startup has identified the right molecule to solve cancer only if the team and business model are appropriate for a pre-seed investment. Pre-Seed Investment Committee members are also always allowed to abstain from voting.

Step Three: Elevate Ventures Investment Committee Review

Opportunities that pass the Pre-Seed Investment Committee will be batched and submitted to the Elevate Ventures Investment Committee for review and vote.

Step Four: IEDC Review

Opportunities that pass the Elevate Ventures Investment Committee Review will be batched and submitted to the IEDC for review and funding approval.

Step Five: Funding and Post-Investment Support

Once the opportunity is funded, the company is responsible for providing quarterly progress reports for three years, and the deal sponsor remains engaged with the company with the objective of advancing the company through the defined milestones.

Investment Terms:

The standard terms for investments are convertible notes with a 20% discount, 8% interest, and a 3-year maturity. Ideation-stage companies will be eligible for a $2M cap, while traditional pre-seed companies will be eligible for a $3M cap. In nonstandard circumstances, other terms may be approved upon recommendation by Elevate Ventures and specific approval by the Indiana Economic Development Corporation.

Investment Policy:

$20k-$50k Investment

Investments should be used for early product or service development – essentially, for preparing the company to maximize its future fundraising opportunities via the assembly and testing of a coordinated, effective core team and the building of a minimum viable product (MVP) that goes beyond a prototype.

To be considered, companies must:

• • Have its Commercial Domicile in Indiana as defined under the Indiana Angel Network II Investment Policy
  • Have a total addressable market of over $500M
  • Have a unique value proposition
  • Have a committed team with the ambition to create a venture-backed, high-growth enterprise
  • Can articulate how Pre-Seed investments up to $100K will be sufficient to attract other investors potentially
  • Be available to present the company pitch deck to the Elevate Ventures Pre-Seed Investment Committee.

$50k-$100k Investment

Investments should be used for companies that have already validated their value proposition and are developing the levers with which they will define how their businesses will ultimately scale via an infusion of venture capital.

To be considered, companies must:

• • Fulfill all requirements outlined above for a $20k-$50k investment consideration
  • Have completed an MVP, or if selling in a government-regulated field (i.e requires FDA, USDA approval), the company should have a viable plan toward developing a completed prototype or trial results
  • Have conducted customer discovery and, preferably, gone through a formal customer discovery process
  • Start to demonstrate professional operations by adding expertise as managers, board members, and/or advisors
  • Preferably, have validated the company’s value proposition by generating early revenue,
  • securing signed contracts, and/or establishing strategic partnerships with entities that will license or buy the company’s intellectual property upon future development
  • May have, or are in the process of, raising capital
  • Be available to present the company pitch deck to the Elevate Ventures Pre-Seed Investment Committee.

If a company is successfully raising capital on different terms, those terms will be taken into

consideration throughout the evaluation and voting process. Only investment terms the Pre-Seed Investment Committee supports will be offered to the Elevate Ventures Investment Committee for consideration.

Special Consideration for Companies with Unfair Advantages

In the circumstances when pre-seed companies with clear, unfair advantages engage Elevate Ventures for investment consideration, Elevate reserves the right to consider investing in using other investment funds (IANF II, IANF III, etc.). This would allow Elevate Ventures to recommend investing more than $100K in the most promising pre-seed opportunities. These companies would be required to follow the traditional direct investment process, including but not limited to due diligence and securing coinvestment dollars.

Examples of Unfair Advantages