Due Diligence of Startups
Due diligence is an important process that helps to assess the viability of a startup before any investment is made. There are different types of due diligence and includes a review of financials, operations, and management.
When looking into investing in a startup, it is important to do both legal and financial due diligence. This means making sure that the company is on sound legal footing and that their financials are in order. Full name, date and place of incorporation, registered number, registered office and accounting reference date, copy of the certificate of incorporation memorandum and articles of association etc are some of the documents required. Additionally, you want to be sure that the founders are honest and have a good track record.
When considering investing in a startup, it is important to perform a business due diligence to assess the company's viability and potential. Key questions to ask include: -What is the product/service and does it have a market fit? -What are the funds being used for and are they asking too much or too little? -How do they envisage future funding rounds?
It is also important to conduct a market due diligence to assess the competitive landscape and potential opportunities/threats.
When assessing a start-up for investment, it is important to do a thorough review of the company's technology. This includes investigating whether the technology is standalone or relies on other technology, and whether it is or can be protected by IP rights. It is also important to assess how quickly technology trends are changing and whether the idea can gain a foothold in the market before newer technology overtakes it
It is also important to assess the management team. That includes their skills, experience and competitiveness.
Does all this sound overwhelming to you? Ezeseed is here to help you find and do the thorough due diligence for you. This helps angels focus on what's important - making wise investments and create wealth.