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A group of founders-turned-funders is investing in the next big things coming from Latin America. Before signing on any dotted lines, they need to be sure which targets walk the walk as well as they talk the talk. Enter Jayaram…
A long-standing client asked us to support its investment (to be made in cryptocurrency) in a Web3 company with affiliated entities in the United States and Latin America. After confirming the scope of our diligence with the client, we dove into the target company’s records and quickly discovered that its intellectual property belonged to an affiliate Uruguayan entity. We notified the client and recommended that we engage directly with the target company to ensure that the value of the IP would accrue to our client.
We promptly followed up with the target company’s Chief Executive Officer and quickly learned that its plans were in a state of flux: the target company, as well as all of the affiliates, were to be merged into a British Virgin Islands entity where all of the investors and intellectual property would be combined. What started out as a routine diligence process to determine the relationship between affiliated companies turned into a revelatory conversation with the target company. We immediately counseled our client that the best way to ensure that its investment would benefit from the target companies IP assets would be to wait and invest in the BVI entity after all of the proposed mergers were completed. The client agreed with our strategy. Maintaining close communication with the target company’s CEO, we confirmed when the target completed its corporate restructuring. After analyzing all of the new documents and confirming that all of the IP assets were transferred to the BVI entity appropriately, we prepared fresh investment documents and coordinated the closing so that our client could confidently invest in the proper company after completing our due diligence and follow up.
The client avoided transaction failure, took advantage of an evolving situation, and consummated a key transaction for its portfolio. We are currently working with this client on its second fund and have advised them on a myriad of convertible debt, preferred equity and token-based deals in which careful attention to detail, going the extra mile to confirm that all diligence concerns are addressed were crucial to their success.