Startup Boards — Diligence Process – Team

Before investing in a startup, it’s important to review the diligence documents, so you understand the business. 

There are three phases to diligence:

1. Documentation diligence
2. Team diligence
3. Domain diligence

Team diligence is the most critical part.  

Gather references for the CEO and call them up to hear what they have to say about the founder, including management style, how they work, and their team dynamics.

In most cases, you’ve heard the CEO pitch, but it’s important to understand the CEO’s skills set, including what is there and what is not.  

Meet with the team and assess their skills.  

It helps to meet the team at their office, so you understand their environment.

The team needs to bring the necessary skills to succeed.

Key questions to ask include:

– What skills are required to be successful?
– What skills are currently in the team?
– What skills are not currently in the team?
– For missing skills, how do we plan to obtain them?
– How long have the team members worked together?
– What projects have they done before?
– How close is the current project to their previous work?
– What other obligations do the team members have for family, social, and other businesses?

In almost every startup failure, the investor can trace it back to the team not being up to the task. 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.