Happy New Year to all our investees, partners, prospects, friends and families! May 2008 be a better year for one and all. At the beginning of a New Year I like to resolve to do some things better! Here is my list for 2008!

• Review more than the 100 prospects we looked at in 2007
• Improve my referral network so that we improve our deal flow
• Build a strong network in the VC community so that local VC's who have prospects too small or too early for them point them my way
• Continue to provide constructive feedback to the opportunities we say 'no' too. After all - we say 'no' nearly 99% of the time!
• Build intimate relationships with early stage companies we like so that when they start looking for institutional investors they knock on our door first
• Continue to build closer and stronger links with our international VC partners - We have great links into Japan and North America - these links help our investees take their businesses global
• Get fitter (and stay fit!) - this business is not for the faint hearted!
• Source more cleantech deals - you can save the world and make money!
• Get one of our investees out within 12-18 months
• Speak less - listen more!
• Listen more to industry thought leaders - we live hectic lives leaving us with little time to listen and reflect on the words of the worlds smartest people

So that's my list! I hope we cross paths in 2008 and have an animated and stimulating exchange of views!

I want to wish all family, friends, partners and prospects "Happy Holidays"! Blue Cove Ventures will be closed from Saturday 22nd December - Wednesday 2nd January 2008. We wont be answering phones, reading emails or doing due diligence. We'll be doing absolutely nothing work related!

This is the end of our first year in operation and it has been enormous fun! We have looked at over 100 companies, got down to detailed due diligence with 10 and invested in two (one announced, the other not).

Our partners from Japan - Hikari Asset Management - just completed a four day visit to Australia meeting our investee companies, a couple of prospects, and friends in the industry. It will become an annual event!

Finally, if you have an idea that has been burning you up inside, take a look at my posts, heed the advice, scrub the 2-page exec summary and send it in to us. We take all submissions seriously and provide detailed advice and guidance for the opportunities we say no to.

Here's to a 2008 packed with great ideas, passionate entrepreneurs and lots of fun!

It struck me recently that due diligence is not too disimilar to a CSI - a Crime Scene Investigation. You're trying to get a clear and accurate picture of a company and you need to do this by carefully piecing together data points from a wide variety of sources.

Management may be telling you the truth (they may not), they may be revealing everything (they may not). One thing you should not assume is that the executives running the company you are looking at have done the same level of due diligence that you will do. Some of the things you turn up may well come as a surprise to the new CEO or CFO.

I like to do first level documentation due diligence early in the evaluation cycle. It provides a granular level of texture you are not going to get from listening to their exec team answering your questions. You need to get in and get your hands dirty. Here are some common things to look for:

• Patent Expiration - when were they first registered and when do they expire?
• Do the company liabilities you've been told about match the liabilities listed in their financials?
• If a new ESOP is being introduced along with your investment has any of the options already been promised to key execs?
• Are there any equity options in any loans made to the company?
• Do you know about all the corporate entities? How do they relate to each other? Are there any licensing or royalty issues between these entities?
• Have they ever used a business broker to raise funds on their behalf? Are any commissions still due?
• Have any professional services organisations been retained on an equity basis?

At the end of each day in due diligence you will have a better understanding of the issues relating to your prospect. Uncovering the facts and the relationships to these facts is key to revealing whether to proceed with the investment or not.

The first investment by Blue Cove Ventures has closed. A formal announcement with more details will be released shortly. Watch this space!