Anyone who has watched shows like Shark Tank or Dragon’s Den is familiar with the concept. Investors will study a business finances, legal documents as well as key individuals and suppliers, as well as customers in order to make a decision about investing. Investors must also conduct due diligence on a company’s business plan and market position as well as growth projections.
Due diligence is an essential process in fundraising. It’s a way to verify information provided by potential donors. It typically involves thorough examinations and checks that are conducted by the prospect department or by an expert team. The scope of the study could be quite broad and it is vital to define the criteria that are the most crucial for your business.
The most frequent areas for questions are:
Financial Details – A thorough analysis of the background of the donor including their financial history. This will typically cover the past 10 years, including all assets, liabilities and earnings data.
Technical Details – Investors would like to know the technology that your product uses, and the way it will scale in the future. They’ll also want know about your client base and any contract information that may be relevant.
Other important areas to be considered include: