Fri, 25 March 2022
Due Diligence Mistakes
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
There are several mistakes one can make in the due diligence process.
Here are a few points to check:
Focusing on every potential risk in the deal and not the primary risks.
In this case, diligence turns into a never-ending slog with no endpoint.
Many CEOs are successful entrepreneurs who did well elsewhere and are now working in a new area.
The CEO must be experienced in the domain of the startup.
Does the company have real traction in the market?
It’s often the case they have a few key customers who jump-started sales, but there’s no real momentum.
Will customers buy the product in sufficient numbers?
The market demand must be great enough to grow the business.
Does the team have a focus on the exit strategy?
Make sure the team knows their exit and has a strong sense of it.
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