Conducting Due Diligence

Agreement and contract drafting
  • Here are some measures to look at when evaluating a startup’s traction:
    • Growth – How many customers do they have? At what rate is this figure growing?
    • Revenue – What’s their track record like? How many sources of revenue have they planned for?
    • PR – How is the startup scaling its metrics?
    • The Market
      • Look at the market to gauge whether the product/service is likely to do well. Assess the market size, competition, and potential acquirers. How ‘hot’ is the sector?
      • The acquisition value of a company can be calculated using a multiple of annual revenues (or expected annual revenues) – listen to this Angel Insights interview with Peter Cowley, Fellow at the Cambridge Judge Business School, for a few tips.
      • If you’re going to invest, you should be sure that the market is large enough for the venture to achieve healthy revenues and a healthy return. At the same time remember that, unlike a VC, you don’t need to wait for an opportunity in a billion-pound market since angels come in much earlier on in the process.
      • And then there’s the factor that everybody forgets about…
    • The Investors
      • When deciding whether or not to invest in a startup, it’s crucial to know who you’ll be investing alongside, and yet this is one consideration that isn’t immediately obvious to many aspiring investors.
      • Will you be investing as part of a syndicate? What industry or financial experience do the other investors in your group have? Who will be leading the round – you, or someone you can trust?
      • Investing as part of a group or syndicate has many benefits, not least among these being due diligence. Two heads are better than one, and ten inquiring minds are even more likely to poke holes in a sub-standard business plan. You can learn a lot through camaraderie.

  • Conduct research on the competition and find out what’s worked for them, and what hasn’t. If a similar product has recently flopped, it may be best to sit this one out.

  • Conduct research on the competition and find out what’s worked for them, and what hasn’t. If a similar product has recently flopped, it may be best to sit this one out.

  • Here are some measures to look at when evaluating a startup’s traction:

  • Conduct research on the competition and find out what’s worked for them, and what hasn’t. If a similar product has recently flopped, it may be best to sit this one out.

  • Conduct research on the competition and find out what’s worked for them, and what hasn’t. If a similar product has recently flopped, it may be best to sit this one out.

  • Here are some measures to look at when evaluating a startup’s traction:

  • Conduct research on the competition and find out what’s worked for them, and what hasn’t. If a similar product has recently flopped, it may be best to sit this one out.

  • Here are some measures to look at when evaluating a startup’s traction:

  • Conduct research on the competition and find out what’s worked for them, and what hasn’t. If a similar product has recently flopped, it may be best to sit this one out.

    • What are the aspects one should keep in mind while conducting due diligence ?

    Due diligence is the most important aspect of startup investing. Without it, you won’t have the slightest idea of how successful (or unsuccessful) a venture is likely to be – you might as well be throwing your money into the wind.

    Due diligence requires a bit of digging, especially as its trail is often hard to find; complex regulations and fear of putting off potential investors mean that the facts may be hidden beneath layers of flowery (and imprecise) language. Having a lead investor in on the round can help, since they will do some digging before pledging their own money into the round, but regardless of what anyone else says, always be sure to carry out your own research before investing.

    When conducting due diligence on a target company, your goal is to thoroughly evaluate its affairs in order to make an informed decision as to whether to proceed with an acquisition. After completing a preliminary overview investigation of the company and signing a letter of intent or term sheet, it’s time to dig deep into corporate data. This will include finances, sales figures, customer data, ownership of assets, personnel records, and customer data. Keep in mind that some proprietary information may be staged for later in the due diligence process when it’s warranted by the seriousness of your intent.

    Broadly speaking, there are five main things you should definitely consider. Below is our due diligence checklist

  • Here are some measures to look at when evaluating a startup’s traction:
    • Growth – How many customers do they have? At what rate is this figure growing?
    • Revenue – What’s their track record like? How many sources of revenue have they planned for?
    • PR – How is the startup scaling its metrics?
    • The Market
      • Look at the market to gauge whether the product/service is likely to do well. Assess the market size, competition, and potential acquirers. How ‘hot’ is the sector?
      • The acquisition value of a company can be calculated using a multiple of annual revenues (or expected annual revenues) – listen to this Angel Insights interview with Peter Cowley, Fellow at the Cambridge Judge Business School, for a few tips.
      • If you’re going to invest, you should be sure that the market is large enough for the venture to achieve healthy revenues and a healthy return. At the same time remember that, unlike a VC, you don’t need to wait for an opportunity in a billion-pound market since angels come in much earlier on in the process.
      • And then there’s the factor that everybody forgets about…
    • The Investors
      • When deciding whether or not to invest in a startup, it’s crucial to know who you’ll be investing alongside, and yet this is one consideration that isn’t immediately obvious to many aspiring investors.
      • Will you be investing as part of a syndicate? What industry or financial experience do the other investors in your group have? Who will be leading the round – you, or someone you can trust?
      • Investing as part of a group or syndicate has many benefits, not least among these being due diligence. Two heads are better than one, and ten inquiring minds are even more likely to poke holes in a sub-standard business plan. You can learn a lot through camaraderie.

  • Conduct research on the competition and find out what’s worked for them, and what hasn’t. If a similar product has recently flopped, it may be best to sit this one out.

  • Conduct research on the competition and find out what’s worked for them, and what hasn’t. If a similar product has recently flopped, it may be best to sit this one out.

    • UN Legal Group
    UN Legal Group

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