Anyone who has seen a show like Shark Tank or Dragon’s Den is familiar with the concept of due diligence. Investors research a company’s financials, legal documents as well as key individuals, suppliers and customers in order to make a decision about investing. They will also do due diligence on the company’s business model, market position and growth projections.
Due diligence is a crucial procedure when it comes to fundraising. It is designed to verify information provided by potential donors. It typically involves thorough examinations and checks that are conducted by the prospect department or by a specialist team. The scope of your research could be extensive, so it’s important to clearly define what criteria are crucial for your company.
The most frequently asked questions are:
Financial Details – An in-depth analysis of the background of the donor including their financial history. This typically covers the past ten years and include all liabilities, assets and earnings data.
Technical Information Investors will want to understand the technology you use and how it is expected to grow in the near future. They will also want to know about your client base and any contract information that may be relevant.
Other important areas board management to think about include: