Most Common Venture Capital Due Diligence Items

I am often asked the question, "Teddy, what are some of the most common due diligence questions you ask before investing in a business or idea?" Here are my top ten items that are commonly considered during a venture capital due diligence process.

1. Market Opportunity: Evaluate the size of the market and the potential for growth.

2. Management Team: Assess the qualifications and experience of the management team. I don't want your CV, I want to get to know you as the CEO, President, Founder, Chief Idea Person, and what fueled the fire in you to pursue this idea and why you and your team will make this work.

3. Business Model: Understand the company's revenue model, cost structure, and scalability.

4. Intellectual Property: Assess the company's intellectual property portfolio, including patents, trademarks, and copyrights.

5. Financials: Review the company's financial statements, including income statements, balance sheets, and cash flow statements.

6. Customer Base: Evaluate the company's existing customers and their satisfaction with the product or service.

7. Competition: Analyze the competitive landscape and assess the company's competitive advantage.

8. Technology: Understand the company's technology and assess its scalability, reliability, and security.

9. Legal and Regulatory Issues: Identify any legal concerns or regulatory issues that could affect the company's operations or growth.

10. Exit Strategy: Evaluate the potential for a successful exit, such as an IPO or acquisition.

It's worth noting that this list is not exhaustive and that the specific items considered during a due diligence process can vary depending on the industry, stage of the company, and other factors. I hope this is helpful to you as you consider your investment opportunities in VC investing.

Yellow Bear Capital does not provide legal or tax advice. This information has been provided for educational purposes only.