Startup Funding Espresso -- Diligence Process - Documentation

Startup Boards -- Diligence Process - Documentation

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

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

For Documentation diligence, ask the startup for a list of key documents. 

If it’s not in one folder, ask them to put it into a Google Drive or Box account.  

It’s common for startups to continually add to their diligence box, so keeping it in one place helps.

The key documents include: 

• Entity filings and articles of incorporation
• Patent filings
• Income statement
• Balance sheet statement
• 3-5 year financial projections
• Cap table

These are the documents you will review. 

Other documents related to the business, such as lawsuits, by-product breakdowns, and by-customer breakdowns, should be requested if appropriate. 

Read each document and check to see if it matches what you understood about the deal.  

Note any differences and ask for clarification.

You may need to sign a Non Disclosure Agreement (NDA) for sensitive information.  

It’s standard practice to do so in due diligence as the information should be kept confidential even without an NDA in place.   


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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