Fin-Ops Evaluation – Capria Edge

Step 1 of 11

Firm, Legal, and Regulatory Infrastructure*
- Firm’s legal entities may or may not be registered, established, or in an appropriate investment-grade structure. Domicile not strategically selected and/or regulatory matters not evaluated. No system for decision-making or resolving conflicts between Partners. Economics not clearly defined even if agreed to in principle but not confirmed via formal agreements.
- Some legal entities established and solid plans underway to complete setup. Initial discussions completed with Partners with written summary on decision-making and conflict resolution principles. Draft document on allocation of GP commits and carry.
- Entities established and registered in a strategically selected domicile. But all agreements may not be in place to define ownership, vesting, address investor needs and requirements, or manage conflicts.
- All entities established and registered with appropriate agreements in place clearly defining ownership, vesting, rights, decision-making, conflicts, commitments, breach terms, and economics such that they meet the needs of the firm and its investors. Agreements are seen as appropriate in the eyes of external LP. There is complete alignment between Partners.
- Implement at least semi-annual review of status to confirm compliance, identify changes in business needs and regulatory environment and proactively explore refinements to agreements, registrations, etc. to optimize your entities and structures. Share your learnings and best practices via industry thought leadership articles.

Digital Infrastructure*
- All internal and external digital interaction done over email. Most information is stored in paper form. No system for document management. No regular backups for digital or paper documents.
- Firm is migrating towards cloud based tools and beginning to think strategically about evaluating and implementing tools.
- Some cloud-based digital tools in place but adoption, usage, and best practices varies across the firm. A number of tools used are redundant. Paper is used only where required and digital copies maintained for all paper documents.
- Tool suite is strategic and best practices are set and understood by the majority of the team.
- Modern, cost-effective digital tools in place and usage is understood and universally executed by all team members. Protocols for using all digital systems clearly documented. Data backup and recovery systems developed, verified and consistently implemented. Tools and systems are audited and improved annually.

High Staff Productivity via Technology Adoption*
- Use email, digital calendar, Skype, Microsoft Office, and a cloud document sharing tool. Little or no documentation on conventions and best practices. No organized and ongoing employee training on best practices.
- Selected and implemented a selection of cloud-based digital productivity tools (e.g. Slack, Asana, Evernote, Dropbox, Drive, CRM system, HR system, etc.) that enable your organization to be highly effective in communicating and operating while creating a company knowledge repository to ensure reliable work product. Initial training and best practices have been started.
- Selected cloud-based digital productivity tools (listed above) have regular usage by most staff. Basic best practices training provided to staff. A few “power users” trying to advocate for best practices and helping out other team members on a case-by-case basis. Team is creating few new/better processes and templates and best practices.
- Full team is trained and have adopted digital tools although consistent compliance with best practices are still a work in progress. All of your Partners are power users of productivity systems and setting a good example for rest of team and operate with self-reliance, not requiring hand-holding for most things. Regular improvements being made to systems and processes improving quality and productivity.
- Full team adoption and increased productivity through digital tools to manage project and operations workflows, document management, corporate knowledge-sharing and other systems. Ongoing best practices development; sharing and training is part of everyone’s role and is highly ingrained in the culture. Team members recognized for their contributions to improve productivity and quality work product of the organization.

Office Infrastructure*
- No formal office for the firm. Team working from home or remotely. Limited access to professional meeting rooms.
- Temporary office setup and operational with sufficient space to meet with investors and entrepreneurs. Some compromises and work-arounds required.
- Firm has office space but may still have issues with internet connectivity, presentable space, and enough space for growing team. Space is presentable enough to have an investor visit and feel comfortable leaving their money with the firm.
- Setup in appropriate “permanent” office space with with signed lease. Most infrastructure including security, furniture and supplies in place. Decorations still in process and a few minor loose ends to resolve. Critical documents are in fire-safe location with off-site physical as well as digital backups.
- Appropriately configured and priced office with signed lease strategically located in the market being served with enough space for growing team and room to meet with staff, investors, and entrepreneurs. Internet and other infrastructure are in place to benefit firm and team operations including continuity in case of incident. Space looks appropriately modest given costs and stage of the firm impressing LPs with your cost consciousness.

Bookkeeping, Reporting, Finance Policies, Processes and Systems*
- Mostly informal bookkeeping and reporting systems in place. Not all receipts and records organized well in a digital format. Challenge to have reliable and timely monthly, quarterly, and annual financial reports.
- You’ve got most of the finance basics in place including the ability to deliver quarterly reports for LPs. You have systems and policies, but many are not written down and are not followed consistently. You get by but an audit is a big effort to support.
- Some of these systems are in place. Initial finance policies in place. Can produce reliable financial statements, but information is not available on-demand and likely books do not close promptly at the end of each period. Some finance policy in place.
- All financial bookkeeping and reporting systems in place, using state-of-the-art systems with capacity and backup for growth and redundancy, to produce regular financial operating reports. Well documented finance policies & processes completed along with templates to ensure consistency and accuracy with right-sized amount of effort.
- All finance processes are organized with a digital project management system with template digital processes for all recurring finance activities. Your finance systems enable you to manage efficient, timely, high-quality internal and external reports. Your auditors are so impressed with your systems and capabilities that they lower your bill out of gratitude.

Budgeting and Cash Forecasting Systems*
- No thoughtful financial forecast models in place for both fund performance and GP operating budget that would be suitable to share with a LP. No budget vs plan reporting systems and processes in place.
- High-level cash flow forecasting spreadsheet for both GP and funds without details or clear timing for recurring cash inflows and outflows. Some budget reporting vs actual systems in place but not rigorous yet.
- More detailed cash forecast for both GP and funds going out at least 18 months with clear assumptions and historical data for comparison. Able to support decision making but not optimized.
- At least quarterly full cash forecast models and systems in place for both fund(s) and GP operations. Key assumptions clearly summarized and reviewed regularly with Partners and revisions made at least quarterly.
- Detailed financial models in place for both GP and fund forecasting cash flow accurately for next 4 quarters and can be easily updated each quarter. Cash management planning review processes in place quarterly and all Partners are well informed and support informed decision making for the firm.

Legal and Financial Contractors and Service Providers*
- Incomplete engagements setup with quality legal & financial service providers in place. Service providers used in one-off instances. None are under formal contract.
- Some legal & finance service providers are in place, but some may not be under appropriate contracts addressing intellectual property, work rules, etc. Need to identify additional service providers for comprehensive coverage.
- Most legal & finance providers are in place and have been engaged for key assignments. Still getting to know these service providers to optimize engagements. Need to find a few more providers.
- Key legal & finance key service providers under contract and already accessed for engagements. A few more specialty providers not yet engaged.
- All contractors and service providers in place and under competitively priced contracts to protect the firm on all critical matters including IP, employment and contract law, valuations support, privacy, and local, national and international securities laws.

Operating Goals & Objectives Management Systems*
- Little or no firm-wide goals or goal review processes in place.
- High level annual goals at a measurable level finalized and shared with all teams members. At least quarterly review of progress towards goals.
- At least semi-annual Specific, Measurable, Achievable, Results-focused, and Time-bound (SMART) goals and/or Objectives and Key Results (OKRs) in place, but management of goals and review process are haphazard. Need better processes and standardization.
- SMART goals system in place and at least annual process in place for review. Team members performance compensation is at least partially aligned with these goals.
- At least semi-annual SMART goals in place and transparently managed at firm, team, and individual level. At least semi annual review process where employees receive constructive feedback to help accomplish their goals, aligned with those of the firm to ensure the firm is on track to meet higher level annual goals.

Financial Services Compliance Systems*
- No formal systems in place to manage financial services advisory regulatory compliance in all relevant jurisdictions. Reactive to requests. Hoping you won’t get reported or caught.
- General understanding of financial services advisory compliance in operating and fundraising jurisdiction with informal processes in place. Likely be an issue if audited/challenges by authorities. Have plans to implement full compliance in the next 6 months.
- Have full understanding of required regulatory compliance in all relevant jurisdiction. On track to have full compliance within required timeframes. Have signed agreements with expert service providers to assist in implementing full compliance.
- Full compliance in place in all relevant operating but possibly some gaps for fundraising in gray areas. Comprehensive internal processes in place to ensure ongoing compliance. No outstanding regulatory issues.
- Clear understanding of compliance policies, systems and processes in place for all of the jurisdiction that the GP is operating in and raising capital in. Firm is registered in all necessary jurisdictions and all appropriate staff educated on and utilizing the firm’s compliance systems. Proactive processes in place to ensure ongoing compliance. Expert service providers engaged or on call if needed.

Audits*
- No organized system for preparing for and supporting statutory or investor required audits. Time consuming process to support. Only some information required for an audit is digitized.
- Audit support system in place, but not fully digitized. Appropriate audit firm(s) selected based on price and reputation.
- Have an audit support system in place, but requires significant effort from team to support an regular audit. Not well-prepared for a special audit. All information required for an audit is digitized.
- Audit support effort from team is manageable, and reduces every year. Audit firm relationships are managed carefully to ensure firm gets appropriate level of service required, at competitive prices based on fund size.
- Well-designed systems to collect, organize and share information required to support statutory audits, annual investor audits, and special audits as needed. Proactively plan for and schedule recurring audits. Minimal time of Partners required and only modest time from Controller to support an audit. Regular, clean audits received.

Cybersecurity Systems*
- No formal policies, systems, or reviews of security for digital systems and devices.
- Policy and enforcement of staff strong passwords and 2-step authentication enabled on all systems which have this capability. Data backups happening but not consistently. Data access controls in place and easy to maintain with safeguards for admin access in place. All data stored on user devices is also replicated on secure cloud services (like Google Drive, Dropbox, Windows OneDrive, Evernote, etc.)
- Implemented password vault for shared business passwords. Business security policies and best practices developed and all staff trained. All data backed up frequently, or stored on secure cloud services that have long-term roll-back abilities. All data shared with external parties is encrypted (e.g. no docs emailed unless they are encrypted).
- Robust cybersecurity policies, plans, and implemented. All staff trained and following policies. Plan is place to address a data breach mitigation, facility fire or earthquake, or ransomware or similar attack.
- State-of-the-art cybersecurity systems implemented and reviewed by external expert and team consistently complying. Includes all business data stored & shared with encryption, data recovery tested, strong authentication systems in place, data access control managed effectively, and whistleblower systems in place to detect vulnerabilities or breaches. Employees briefed at least once a year on current threats and best practices in cybersecurity.

Step 1 of 11

Data loss imminent!