Due Diligence: A Peek into an Investor’s Playbook
With fundraising and attention from venture capitalists comes “due diligence.” Entrepreneurs need to be prepared for the process when that knock on the door comes. Of course, the big question is, “what are investors looking for?” We looked to a blog post by Lisa Suennen, a Managing Partner at Venture Valkyrie LLC, to find out.
In her post, Due Diligence: A 12 Step Program, Suennen addresses venture capitalists with a “back to basics” refresher on due diligence, focusing on 12 areas ripe for investigation, including the company’s capital structure. What better way to understand the process than to learn how investors are taught to do it?
Suennen is blunt about the process, “Nothing is off-limits in due diligence when you are the one writing a big fat check and the other person wants it.” The takeaway? Be ready—for anything. Having your executed documents organized and easily accessible keeps things moving and communication flowing. Most importantly it avoids costly delays that reflect poorly on your company. Suennen advises fellow investors, “If you get a bad feeling in your gut, listen to it and exit stage right.” Make sure you’re ready, documents in hand, to keep the spotlight on you!