In my activities as an angel investor, and my work with new ventures seeking investment, I find the “due diligence” stage to be fraught with the most risk. Usually this stage only really starts after an investor has expressed serious interest, or already informally agreed to invest.
Most founders consider the story already told and the deal pending, so they aren’t sure what more then can do. Others schedule long and exhaustive practice and coaching sessions for everyone on the team, including showcase customers, to make sure that everyone tells the most positive and consistent story.
Trying to stack the deck probably won’t work, but some effort makes sense, since I have personally seen more than one deal fall apart due to key team members being totally out of sync. My best advice is to put some structure and discipline into your due diligence preparation, including the following steps: Schedule a team meeting to bring everyone up to date.
This meeting should include the CEO giving the investor pitch to the whole organization, and distributing the current business plan document to everyone. Since due diligence will include one or more visits from investors, everyone needs to be on the same page, with no surprises.
Identify and resolve any pending personnel situations. You need to brief the investor early if there are organizational or people changes that are in process, or conflicts that may become apparent during the due diligence visits. Read more from blog.startupprofessionals.com…
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