Anyone who has watched shows like Shark Tank or Dragon’s Den is familiar with the concept. Investors research a company’s financial statements, legal documents and other important individuals as well as suppliers and customers to make a decision on investing. Investors also conduct due diligence on the business plan of the company, market position, and growth projections.
Due diligence is a vital procedure when it comes to fundraising. It is designed to verify information given by potential donors. It typically involves thorough tests and assessments that are performed either by a prospect department or a specialist team. The scope of your research may be broad, therefore it’s crucial to establish the most important criteria to your business.
The most frequent areas for inquiries include:
Financial Details – An in-depth review of the background of the potential donor including their financial history. This typically covers the 10 years prior to the date of application and includes all assets such as liabilities, assets, and earnings information.
Technical Details – Investors would like to know what technology your product uses, and how it will expand in the future. They’ll also want know about your client base as well as any contract details that could be relevant.
Other important areas of inquiry include: