Due diligence for a startup is something of a contradiction in terms if you think about it. It’s a process that aims to give the technical, legal and financial grounds upon which a startup can gain investor support. Yet the process of getting a startup due diligence portfolio up and running is a labor intensive and greatly time consuming one that startups, trying to keep margins narrow, often lack the resources to properly do. With a reported 47% of investments in startups falling through due to unsatisfactory due diligence, how is a company to beat the resources conundrum? How is a startup to get its ducks in a row to land an investment?
The answer lies in the value of knowing the due diligence craft. Knowledge is power and knowing how to prep accounts for half of your potential success.
The following is the short and long of what you need to prepare your startup for a due diligence process. It begins with a call to action to founders and management teams to stop marketing their companies through rose-tinted lenses when speaking to investors and VCs and ends with a realistic checklist of what institutional investors are actually looking for.
CTOs Step Up to the Plate –
Preparing Your Startup for Due Diligence
Archive, archive, archive. Be prepared to show documents dating several years back and know that explanations about missing data will not be looked at kindly.
Since startups are tech based businesses, keep in mind that your trademark technology likely comprises your startup’s greatest asset. Be prepared to describe how your technology works, prove its scalability, and offer performance indicators. You will also need to show how your technology fares as compared to your competitors in (Read more…)
*** This is a Security Bloggers Network syndicated blog from Blog – WhiteSource authored by Anat Richter. Read the original post at: https://resources.whitesourcesoftware.com/blog-whitesource/the-8-startup-due-diligence-dos