Startup Boards — Diligence Process

For startup investing, it’s important to have a diligence process.

In most cases, you’ll sign a term sheet with funding contingent on passing due diligence.

It helps to tell the company about your diligence process, such as what documents are required, what steps you perform, and how long it typically takes.

This helps eliminate the “how is it going?” calls. 

The process may vary from deal to deal based on the risks associated with each deal. 

Write out a list of your concerns and look for answers both in the documents and through discussions with the CEO.

1. High-level questions to ask include the following:
2. Product validation — does the product work?
3. Market validation — will someone pay for it?
4. Team validation — is the team sufficient for the job?
5. Funding validation — how much funding will be needed to reach the exit?
6. Exit validation — will someone buy the company being built?

 

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.