Anyone who has seen a show like Shark Tank or Dragon’s Den is familiar with the concept of due diligence. Investors research a company’s financials, legal documents and key people and suppliers, as well as customers to make a decision on investing. They also conduct due diligence on the business’s model of operation, market position and growth projections.
Due diligence is an essential process when it comes to fundraising. It aims to verify information given by potential donors. It typically involves rigorous reviews and assessments that are conducted by a prospect-development department or a team of specialists. The scope of your study may be broad, therefore it’s important to clearly define which criteria are most important to your business.
The most popular areas of inquiry include:
Financial Details – A thorough review of the prospective donor’s background and financial history. This will typically cover the last ten years of their history, including all assets, liabilities and earnings data.
Technical Information Investors should understand the technology that your product is based on and how it will grow in the near future. Investors should also learn about your clientele and any pertinent contract details.
Other important areas of inquiry might include: