Conducting due diligence is an essential part of being a venture capitalist. By taking the time to carefully examine a potential investment, you can minimize your risk and make sure you're backing a sound business.
Use this Quest to make sure nothing falls through the cracks (trademark, patent & copyright checks, directors & officers insurance in place, trade secrets protected etc).
Create A Due Diligence Process You Can Reuse: Use this Quest to help you conduct all of your post-onboarding due-dilligence checks. Like reviewing the directors and officers (D&O) insurance policy and making sure that all intellectual property (IP) is protected.
* Review Company's Insurance Policies
Ensure the company has a robust Directors and Officers (D&O) insurance policy in place. This type of insurance protects individuals from personal financial losses in the event that they are sued for wrongful decisions or actions while acting in their corporate capacity.
* Check Trademarks, Patents & Copyrights
A big part of due diligence is making sure that all intellectual property is legally protected. This means checking for any copyrights, trademarks, or patents that may be in place.
* Check Trade Secrets are Protected
Be aware of a company's trade secrets. Trade secrets are any confidential information that gives a business an edge over its competitors (e.g. info about a company's products, R&O, business strategies, and customer lists).
The Due Diligence Process
✅ The initiation stage is where the VC firm decides whether or not to move forward with a deal. This initial step is based on a number of factors, such as the deal's potential, the team's ability to execute, and the attractiveness of the market.
✅ Once the decision has been made to move forward, the research phase begins. This is where the VC firm will do a deep dive into all aspects of the company, from its financials to its competitive landscape.
✅ The evaluation stage is when the VC firm decides whether or not to invest in the company. This step takes into account all of the information gathered in the research phase, as well as the firm's own risk tolerance and investment profile.