Due diligence works best when it’s a shared endeavor.

It can take a substantial amount of time to diligence a startup.

The ideal size of a due diligence team is six people.

Here are the key roles and responsibilities of the team:

The lead.

Takes responsibility for the overall diligence process and typically recruits the others on the diligence team.

Sales, marketing, and competition.

Investigate the sales of the startup, as well as the marketing strategy and the current competitors.

Financials.

Reviews the financial pro forma, income statement, and balance sheet to understand the financial health of the business.

Product and technology.

Reviews the status of the product and the technology underlying it.

Team.

Reviews the skills of the team and the commitment of each one to see if it meets the needs of the business objectives.

Terms sheet.

Builds and negotiates the terms sheet, including the valuation.

Consider joining an angel network to find others to help with due diligence.

 

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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.