Due Diligence Checklist for Early Stage Investors
Essay by Norioso • May 15, 2019 • Dissertation • 1,228 Words (5 Pages) • 589 Views
Due Diligence Checklist for Early Stage Investors
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Anyone is free to use this Google Sheet. It is designed to be used in conjunction with our companion eBook.
If you want to learn more about angel investing, check out these other resources.
The Due Diligence Checklist for Early Stage Investors is designed as a quick reference guide to help steer you through the various aspects of diligence. By using this checklist, you can ensure that your process covers the major areas of diligence. The questions here are optimized for evaluation of very early stage technology companies; supplemental questions may be appropriate for use with later stage companies and life sciences companies. This Google Sheet offers suggested guidelines. It does not purport to be comprehensive, so use your judgement when conducting your due diligence.
Stones Unturned: An Investor's Guide to Due
Diligence in Early Stage Companies
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Diligence Topic | Information Request | Tasks | Key Questions | ||
Leadership Assessment | Resumes for key leadership team members | Review resumes | Does the CEO possess the experience and leadership abilities to succeed? | ||
Professional references for key team members | Interview references (see interview guidelines) | Do they have skills for where they are going, as opposed to where they have been? | |||
Resumes and contact info for board members and advisors | Gather additional information from network as available (asking around, checking LinkedIn - anything to find blind reference checks) | Do the CEO and team have a proven track record? | |||
Assign team member(s) to spend time with CEO | Does the team possess the appropriate balance of experience and skill sets? | ||||
Assess CEO and team for leadership, integrity, track record, required competencies | Are the board members and advisors suitable and committed? | ||||
Assess suitability and commitment of board members and advisors | What key hires are needed to address gaps? | ||||
Technology, IP and Product Roadmap | Descriptions of technology and product | Review information and meet with technical team | Is the technical team qualified and experienced? | ||
Relevant technical publications | Assess critical technologies, tool choices, software architecture choices, scalability of solution | How strong are the technology and IP positions? | |||
Patents and patent applications | Assess IP defensibility | Is the product roadmap achievable? |
Related IP info (defense: Freedom to Operate (FTO)?, offense: enforceability?)
Conduct additional secondary research as needed
What are the remaining risks related to technology, IP and product roadmap?
Product roadmap with key milestones Conduct additional expert interviews
if needed
Are their superior technologies on the near term horizon?
Competing technologies and commercialization status
Assess remaining technical risk, IP defensibility, competitive technical position
Regulatory Strategy Regulatory strategy, if relevant Review regulatory strategy Is the regulatory strategy well thought through and feasible?
Status of dialogue with regulatory authorities and/or consultants, copies of relevant communications
Interview regulatory experts Are the company's financial resources sufficient to implement
the regulatory plan?
Assess comparable regulatory pathways for other products as appropriate
Are assumptions about partners/acquirors' roles in the regulatory plan reasonable?
Assess regulatory climate What are the remaining regulatory risks?
Customer Need and Go-to- Market Plan
Go-to-Market plan with key milestones and granular detail on sales approach
Partner identification and relationship status
Sales pipeline by stage, factored to be truly realistic and achievable
Any current marketing, joint venture, distribution agreements
Customer, prospect, and partner references (see guidelines for interviewing customers)
Review information and meet with marketing and sales team
Interview customers, partners, prospects as appropriate
Gather information on industry comparables as appropriate
Collaborate with financial team to assess revenue and pricing model
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