2. Technology

Technology differentiation is a critical element to Blackhawk’s decision process. The important point is to not only have technical differentiation, but also to insure it translates to compelling differentiation to customers in the market.

As private equity investors we rarely are investigating a complete product, therefore our technical review is as much about people and processes as it is about the code.

Our technical due diligence typically starts with a full one to two day review with the engineering and product marketing staff. During this session we want detail on the following:

• Market requirements processes
• Feature specification processes
• Roadmap processes
• Architectural review processes
• Engineering schedule process
• Quality assurance processes
• Documentation processes

Our goal is to feel 100% confident that the team is capable of building exceptional products-now and in the future. We validate all of our due diligence with outside consultants and industry experts close to our group. Finally, we round out our technology assessment with a comprehensive intellectual property and patent protection review. We must ensure all technology differentiators are well protected. Technical recruiting processes.
3. Team

Looking back over our history, Blackhawk’s success has depended on great talent. Our goal is to build world class teams starting with talented founders and complementing their skills over time.

We believe we have a proven methodology for assessing founders and executive teams. While I can't assure you that all interviews will be like this, it will prepare you fully for what might come.

Typically we begin with the perfunctory questions that happen in most interviews. After one hour, we will invite you to the whiteboard to diagram the last two to three organizational charts associated with your prior most meaningful jobs. These charts include managers, peers and direct reports by name. For each individual on that white board, we may ask the following:

• How would you describe this person's management style? (Getting context)
• If we where to talk to this person, (with your permission of course) how might this person describe your strengths?
• How would this person describe your areas for improvement, where would you be considered "less than perfect?
• Who might your supervisor or board say you had the most difficult time with?
• If we were to talk to the previous CEO, how would they say your were perceived in the organization?
• Among your superiors, peers and subordinates, which group would rank you 1, which one 2 and 3?

This three to four hour process typically has the following outcomes:

• We are obtaining instant reference checks.
• We have built a list of names to call that are off the official reference list.
• When we call these references, we describe the organizational chart process and receive far more candid feedback.
• Most importantly, we begin a relationship based on trust. From here on out, if we invest, the CEO knows they can come to us with problems before they may have solutions.

Blackhawk believes the time invested up-front pays huge returns. Remember the last time you interviewed an employee? Most have only an hour to get to know the candidate, with the first 30 minutes allocated to describing the company and the job. If this employee does not work out, you will most likely spend more then an hour getting on a plane to fire the employee than you did interviewing.
Parting Practical Thoughts

As you go through the due diligence process, here are some practical tips to keep in mind:

• Continually take temperature. Only 5-10% of entrepreneurs I work with ask closing questions like: Have I answered all of your key questions? Or, even better: How do I compare with the other 100 business plans on your desk and what is the likelihood we'll reach serious due diligence? Get to the truth early. Waste no time.
• Course-correct based on feedback. Chances are objections you hear at one private equity group will be concerns at another. Incorporate the feedback you hear-either by adding it or refuting it. Think of this feedback as sparring practice. It is like training that makes you stronger in fighting real challengers to your success.
• Conduct your own due diligence. This process is the foundation for the long term partnership. Experienced entrepreneurs know that the investor relationship is akin to marriage.
• Finally, don't sign the deal unless you can comfortably answer the question: Will they be a good partner when things don't go according to plan? Because we all know, they never do.

Hope this might be of help next time you approach us with your next deal.