06 Nov Seed and Early Stage Due Diligence: Part II
In my previous blog, I wrote about two factors that distinguish investment due diligence in seed and early stage high impact investing from investment due diligence for more established businesses. On the one hand, seed and early stage due diligence is binary – every deal must have 10x return potential, but few deals actually deliver anything like that kind of return. On the other hand, it is more qualitative in that seed and early stage businesses don’t usually have the kind of track records needed to make financial modeling and forecasting more than a fanciful exercise.
In this blog, my focus is on what the “Big Four” due diligence issues for seed and early stage investing, the traditional trio of People, Market and Technology, and a fourth issue, Financing, that is of particular importance in flyover country – that is places (like Wisconsin) where angel and venture capital resources are fewer and smaller than they are in major venture capital hubs like Silicon Valley.