If you’re an entrepreneur needing outside funding for your business, you’ll want to get your due diligence checklist in order. But what *is* due diligence and why should you care? Below, we break down what due diligence is, why it matters to your business needs, and what you should have in place as you start your fundraising journey.
Due Diligence 101
Due diligence is the careful investigation into a company prior to making an investment. The exploration process enables the investor to obtain an in-depth understanding of the company, its business model, culture, technology, processes and ultimately—its investability. It is, therefore, one of the most important components of the funding process for established and new businesses alike.
Due Diligence Checklist
As a business owner, it can be difficult to put the investor hat on if you don’t even know investor language. So we’ve provided a list of questions that will help you develop your investor savviness and prepare the best elevator speech in the history of elevator speeches as you enter the fundraising phase for your business:
- Company Goods or Services
- What is your company name?
- What products / services do you offer?
- What are your company’s values? What do you stand for?
- Do you have a domain locked down? And all social media?
- Have you done due diligence re necessary Intellectual Property?
- How do you plan to make money/What’s your strategic advantage?
- Company Structure
- What type of entity do you/will you have?
- Where is your company located?
- Will you be privately held or public?
- Do you have a physical location? If so, where?
- How are you managed?
- How are you currently owned?
- Company Leadership
- How has ownership been held/recorded?
- Who has or might claim an ownership stake in the company?
- What types and amounts of interest will each person have?
- Who runs the company? What are their titles?
- Are there employees? If so, who?
- Are there contractors? If so, who?
- Company Finance
- How much money have you spent on the company?
- Have you made a profit so far?
- What large expenses have you had/do you anticipate?
- What other costs might you need to float in the first year(s)?
- Where is your funding coming from so far?
- How will investors be repaid (loans or equity)?
- Company Legal and Support
- Do you have written agreements for everything?
- Do you have insurance in place?
- Who is your lawyer?
- Who is your accountant?
- What is your marketing plan?
- What is your tech plan?
Still have questions about due diligence or how you can prepare your business for capital investment? Get in touch with us, we’re happy to help!