In order to create a sound AWES Basket Fund, every participant needs to be fairly valued with respect to the assets it brings to the fund. The valuation process should meet professional engineering and accounting standards. A "Merit Audit" procedure is a key procedure to ensure as best as possible to investors that claimed value is real and verifiable.

A Merit Audit of an AWES group or individual would cover:

= People- Applicable experience, education, skills, special accomplishments, etc.
= Technology- Quality, IP (patents or CC), convincing demonstrations, test engineering orientation, etc.
= Company- Culture, management, values, assets, track record, etc.
= Ability to flexibly collaborate across the Basket picks- Engineering and business agility, defects, shortcomings, barriers, etc.
ETC.

A scoring matrix could be designed to break value qualities down into a fine-grained checklist that reveals the relative merits of the AWES players internally competing for Basket funds. Ventures with an overall weak value would not qualify as such, but might have components worth salvaging, like an engineering team, or some special asset (like a developmental test site). These parts could be recycled into the general venture. Merit will be found for larger collaborative R&D, as well as specialized efforts. The Basket should support a balance of these approaches. Hidden merit even exists in supporting some schemes to fail, in order to end engineering uncertainty over dead-ends.

Academic Peer Review is a key model to adopt. Professional Engineering and Accounting also have well developed standards to apply to a Merit Audit process. Sound Merit Audits are the answer to the question of how major Basket Fund investment can be equitably distributed.

• CoolIP*                      ~Dave Santos                 Nov. 20, 2012        AirborneWindEnergy/message/7977

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