Due diligence is perhaps the most grueling and frustrating part of equity fundraising. This video overview provides some high level insights on “The Due Loop,” “Meta Watch,” and your goals for the due diligence process.
The “Due Loop” is the name we’ve given to the seemingly endless process of cycling through the various steps of equity fundraising that inevitably include more and more due diligence. This is one of many surprises in the equity fundraising process.
“Meta Watch” summarizes some high level inferences that investors will be looking to make about you and your team during the due diligence process. These include:
- How organized are you?
- How easy is it to pull together the information requested, which in turn means you have your business act together?
- Are you responsive and candid?
- Do you have integrity?
- Are you someone the investor wants to work with for the next 5-7 years?
- How good are you at communicating with investors?
- How do you react to stress? Disagreement? Criticism?
- Can you deliver on promised results?
Your Due Diligence Goals
The video concludes with a brief review of what you should be trying to get out of the process.
- Finish the process!
- Bring investors from interest to understanding to enthusiasm to advocacy
- Do the investors’ homework for them as much as possible
- Make sure these are the investors you want to work with over the next 5-7 years.
While the process can be painful, preparation for due diligence is actually very healthy for your company. It forces you to pay attention to important details, organize critical information, take care of lingering issues, and think clearly and strategically about both your business and what you plan to do to fully exploit your opportunities.