December 23, 2020 by investor
How does due diligence vary between angels and venture capitalists?
At a high level, the diligence is the same between angels and VCs. They both look for a good team, a strong market, and a quality product.
At a detailed level, the angels who come in earlier than many VCs will look at a deal differently.
On the first pass, angels look for product validation and market validation. Does the product work and will someone pay it?
On the second pass, angels look for a strong team that can take it all the way and a large market that the company can pursue.
VCs on the first pass look for a strong team, initial traction, and a large market.
VCs on the second pass look for synergies in the team, KPIs that show growth, and scalability into the market.
It’s important to understand who you are pitching and what they look for.
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