Helping Angels Make Confident Investment Decisions – Getting to Know Verafī


By: Nicholas McKinley, CEO of Verafī

Verafī, ACA’s new Affinity Partner, has a unique background that generates the knowledge and experience to assist angels in completing the valuable due diligence needed to ensure confidence in personal and investment decisions.  As veterans of the CIA with over 31 years of experience in special operations and counterintelligence, Verafī specializes in collecting, analyzing and presenting intelligence so angels can make confident decisions about key hires and investments.  Get to know Verafī as we sit down with Nicholas McKinley, CEO, and learn more about how this innovative company is helping angels make smart and confident investment decisions.

Q:  Nic, angels’ needs for background checks comes in bunches sometimes. Are your engagements structured as a bundle, a monthly fee, a cost per background check, etc.? Can someone do just one check, or are there other commitment structures?

At Verafī, our goal is to work within our clients' business process, so we offer a variety of solutions to meet those specific needs.  As a result, we can structure client engagements on a per-report, prepaid volume discount, or enterprise subscription model.

Q:  For the people background checks, what percentage of the time is something of significant concern identified, and what percentage of those lead to a decision to not fund?

We do not always have visibility into the final decisions made by our clients. Still, approximately 30% of client reports contain a finding of significant concern that the subject had not previously disclosed.  The General Partner at one of our venture clients said it best when we asked for a testimonial after helping them avoid a scammer:

"After being in venture capital for decades, I've seen my share of scam investments that have destroyed firms and investor reputations. VERAFĪ has provided us with so much in-depth research that they've saved our firm millions in losses. Their attention to detail and access to next-level intel has been essential to our success. We won't invest without them."

Q: You are ushering in a new area of accessibility to high-end pre-employment and pre-investment due diligence on individuals.  Why is this important to ACA members?

All investors know that at the early stage of a company, they are investing in a person with an idea, and their potential to execute on that idea is usually a factor of what they have done in the past.  But is what they are saying true?  Are they accurately representing themselves?  Are there factors that, if known, would cause you not to invest?  In the past, investors chose between a cost-effective background check or a cost-prohibitive comprehensive dossier.  But the background check only tells you what someone got caught doing, and the comprehensive dossier is too expensive.  At Verafī, we believe that early-stage investors are the lifeblood of the modern economy and deserve to have the best intelligence protecting their investment decisions, so we created an industry-specific solution for the ACA to make the previously unaffordable level of comprehensiveness available to angel investors at an affordable price.

Q: Can you give us an example of how your pre-investment due-diligence services solved a real-life problem?

We had an early-stage investor client who was considering a sizable investment in a biometrics company.  The company had brilliant software, and their technology was on the bleeding edge.  Their IP was well protected, and the founders were brilliant with all the right education and experience.  By all indicators, the investor was lucky to get the opportunity to invest.  This investor uses our services on all of his investments as part of his standard due diligence process, and in this case, we were able to uncover that the founder was a white supremacist.  Our client passed on the investment, and eight months later, those details about the company's founder were discovered by a tech industry reporter.  When the story hit the media, the founder was forced out, and the company was destroyed.  All the previous investors took losses, but our client was protected.

Q: Ultimately, how does engagement with Verafī benefit individual members and the ACA as an organization?

We are excited to support the ACA by making a previously unaffordable level of reputation and personnel due diligence available to ACA members.  Angel Investor specific products, a 10% discount for ACA members, and further support of the ACA mission combine to bring an unprecedented level of value to ACA members.

Q: For someone who want to get the process started and meet with you, what is the easiest way to begin?

Ordering the intelligence you need is easy:

  • Vist https://www.verafi.net/aca/
  • Click the "login or create an account" button to create an account.
  • Once your account is approved, login, and select your product by clicking "order now."

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IP Due Diligence for Startups by Russell Krajec (Rockies Venture Club)  on  November 13