Whether you move on to Discovery or not, we recommend that you are prepared to provide prospective investors with Due Diligence material as soon as necessary. Advanced preparation of material for Due Diligence can save a lot of time in the process and demonstrate organizational skills to potential investors.
Every industry and company stage may require a slightly different Due Diligence process. The following is a list of material/information that you should consider having available for prospective investors. Having Due Diligence material available will expedite the process.
- Business Plan – does not have to be 100 pages but should summarize the strategies and opportunities for the next 12-18 months
- Financial Plan/Model – income statement, balance sheet, cash flow, business model with revenue assumptions for next three years. Include historical data if available
- Management CV’s and references
- Market Data – industry reports, market size data, market research etc…
- Customer references
- Contracts – suppliers and strategic partners
- Sales data – particularly recurring sales at an existing customer
- Cap table and historical financing term sheets
- IP documents
- Certificate of incorporation
- Organizational chart – current and next 12 months
It is in everyone’s interest for Due Diligence to move as fast as possible. You should assume that Due Diligence will take anywhere from 4 to 16 weeks to complete. The key variables to an expedited process are 1. Information availability from the company 2. Calendar synchronization 3. Free time to evaluate information 4. Lawyers.