Your Due Diligence on Potential Investors

Fund raising is a crucial aspect of a new venture’s corporate life-cycle.

Your Due Diligence on Potential Investors

Your Due Diligence on Potential Investors needs to include both strategic selection of investor groups and detailed research on individual executives within investment firms/units.

Planning for a Meeting With a Potential Investor

Part of your planning for a meeting with a potential investor is how you will conduct your due diligence on that specific investor. As a part of that you have researched him/her and prepared questions that you are going to ask the investor.

During your pre-meeting research you learned:

  • That he/she will lead an investment round.  If they will not lead, he/she is not the investor that you need
  • He/she is interested in startups in your space
  • You understand what prior investments he/she has made in other startups in or near your area of activity and in what geographic regions
  • You understand that he/she is comfortable with your preferred Financial Exit
  • You understand how much he/she typically invests in which rounds
  • You know whether or not he/she usually wants a Board seat or Board Observer rights
  • You know whether he/she wants to see in meeting I a 15 minute PPT presentation or a detailed 60 minute presentation at the block diagram or other detailed level

One aspect of this preparation is deciding how you will:

  • Decide whether or not you wish to have a future meeting
  • Decide if you wish to enter into serious discussions with this investor

Conclusion

Your Due Diligence on Potential Investors is critical as you identify strategically important groups of investors identify individual venture capital firms and understand individual investment executives.

John Gale’s White Paper on Business Plans is Available for Download

This Post is based in part on John Gale’s White Paper, Startup Presentations to Angel/Seed Stage Investors and Partners: Recommendations for Best Practices  This White Paper can be downloaded from:

  • The Business Plans page on this Website
  • It can also be downloaded from this page on the Angel Capital Association website.  The Angel Capital Association is the leading professional and trade association supporting the success of (US) angel investors in high-growth, early-stage ventures

 

 

 

 

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