Startup Funding Espresso -- The Diligence Process

Startup Boards -- Diligence Process

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

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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