As the startup proceeds through the due diligence process related to a potential investment from an angel group, VC or Corporate VC, (CVC), the process will include discussions and reference checks with a broad base of the start-ups’ constituents.
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Startup due diligence is one of the most important components of the funding process for a new business…
noun: value in a property, business, etc., that results from the work that a person does to improve it;
also : the work itself”
Adequately addressing these 8 factors in your pitch to an angel group will build confidence in the minds of the investors, improving the ultimate probability of funding.
One or two of every ten investments bring most of the returns to the portfolio of an angel investor, and it’s difficult to determine which of the companies will provide the returns.
A principal goal in the life of a scalable startup company is getting external equity funding. The closing of a funding round is cause for celebration. However, founders are often left with a somewhat bitter-sweet taste when they realize what just happened.
David S. Rose, the CEO of Gust and Founder of the New York Angels defines Due Diligence in his book, Angel Investing – The Gust GUIDE TO Making Money and Having Fun Investing in Startups. The careful investigation into a company prior to making an investment.
Investable companies don’t occur by accident. In fact, the opposite may be true; many companies may accidentally become un-investable.
Concept stage startups are usually funded by entrepreneurs, family, friends and individual angels. An opportunity has presented itself to you, an idea for a scalable business you see clearly in your mind. How much is your idea worth? It all depends on what you do with it.
The greatest hurdle to getting startup funding is providing the Investor with the information that illuminates your company and shows the details of why you are “investable.” That is the process of creating a world class Due Diligence package.