Fundraising due diligence is a process that permits investors in equity like venture capital companies and angel funding to complete research on your company, verify your business plan, evaluate your market potential, and investigate any potential investment risks. It is a crucial part of the fundraising process and is required for any startup that seeks venture capital or angel funding. However, it can be a lengthy and time-consuming process for founders.

Investors are required to look through a wide range of documents and information during due diligence, from financial statements to projections to legal papers. To accelerate the process, it’s essential for startups to be organized and prepared. If you can provide the right information at the appropriate time you’ll save your team time and money. Then, you can concentrate on the most important aspects of your fundraising process.

Due diligence includes not only the financials, but also day-to-day activities of a business. Having clear sales forecasts and a current operational plan will increase confidence in investors about your business. Investors are also more confident when you have a solid operating background.

Some prospects need enhanced due diligence due to their size or sensitive nature. This includes international prospects as well as those with a questionable history or a controversial or high-profile background. It could be solicitations that place your organization in the spotlight (such namesake gifts). In order to efficiently manage such risk, it’s important that all departments involved in fundraising and stewardship are involved. This ensures that all relevant information is gathered, analysed, and presented to your team for decision-making.

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