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Is there a due-diligence check list for investor talks and most critical areas to focus on?

As an investor, what are the areas or pieces of information which are most important to get right? Would appreciate if I can get guidance in this area...
- Product / solution based start-ups

4 Replies

Mike Stemple
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Mike Stemple Advisor
Founder at Inspirer
I pulled the below out of my courses:
First is the Due Diligence Checklist I put together after selling a few companies. I wanted something a little easier to have BEFORE so I could get everything in order ahead of time. It will also help think though what an investor might want as well.
Second is my 101 Questions list. This will help you think through all the questions a investor/acquirer may have for you.
Third is a zip file that when expanded creates a directory structure to organize ALL your documents. This will help you separate everything into a easy to share structure for whoever does the due diligence.
Do me a favor and let me know your thoughts on these and if they helped.

-Mike
Josh Kerr
1
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Josh Kerr Entrepreneur • Advisor
Entrepreneur in residence at Capital Factory
This article I wrote on the subject of mistakes founders make during fundraising might be helpful: http://joshkerr.com/the-definitive-guide-to-mistakes-founders-make-raising-money/ Sent from my iPhone
Manav Chaudhary
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Manav Chaudhary Entrepreneur
Healthcare | Consumer Experiences & Journeys | Analytics | Start-ups | Mentor
Thank you Mike and Josh for sharing valuable pieces of information. Really informative and helpful. Much appreciated.
Karen Goldner
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Karen Goldner Entrepreneur
Associate Director of Entrepreneurial Services at Women's Business Development Center
Investors will typically have their own due diligence list or checklist if you make it to that stage. So, I assume that you are asking what information is needed in order to reach the point where an investor is interested enough to pursue due diligence? If that is the case, then here's the general list - not necessarily in this order:
Product (what it does, what stage of development it's at - just enough so that it's understandable. PLEASE do not spend a ton of time on this.)
Market (how big, what is the pain you're addressing, why do you think you have product/market fit? [hint: if you don't have some actual data on this, go get it first.])
Team (including board members and current investors)
Competition Go-to-Market Strategy and Revenue (actual and projected)
Operations
"The Ask" - how big is the round, Use of Funds, and general terms (i.e., your proposed valuation, etc. - but don't get into the weeds unless they ask you) - if you anticipate subsequent rounds of financing, say that.

*You blew it if they ask these questions after the presentation:*
o So what's your business all about? o Who are your major competitors, and what makes your products and services unique?
o Who are your targeted customers?
o What's the barrier barrier to entry for competition?
o Why are you raising the money you want to raise?
o How far does that money get you?
o Do you have any customers? Have you spoken to potential customers?
o What's your marketing strategy?
o What's the team look like? What are your backgrounds?

*Be prepared to respond to these and a million other equally challenging questions:*
o How have target customers responded to your prototypes?
o What is my stake in the company company and my ROI? o What other investors are you talking to?
o Do you continue to see yourself as part of the senior management team of this company?
o What will happen next if the company fails?

Hope this helps!
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