Due Diligence Primer from Wasavi Ventures Academy
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Due Diligence Primer from Wasavi Ventures Academy

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Due diligence is the process of analyzing a startup company's chances for success. This process is the primary job of an analyst and makes up the core of the job. But it is also a highly valuable ...

Due diligence is the process of analyzing a startup company's chances for success. This process is the primary job of an analyst and makes up the core of the job. But it is also a highly valuable process to understand if you want to play any part in the entire startup ecosystem. This class will cover every aspect of due lignite and the way that we conduct it at Wasabi Ventures.

This presentation is part of the Wasabi Ventures Academy.
If you are interested in taking classes, email wvacademy AT wasabiventures.com

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Due Diligence Primer from Wasavi Ventures Academy Due Diligence Primer from Wasavi Ventures Academy Presentation Transcript

  • Basics of Tactical Due Diligence An Innovative And Dynamic Approach To Venture Capital And Incubation
  • What Is Due Diligence? Official Answer: Research determining if a company is a sound investment Unofficial Answer: Figuring out if there is any chance we can say “yes” Academy.wasabiventures.com @wasabiventures Interviews Web research Talking to friends and enemies WHAT IT ENTAILS:
  • Due Diligence Fundamentals Academy.wasabiventures.com @wasabiventures NOTE: Lots of details on this in the Training Workspace FIGURING OUT FOUR KEY AREAS PEOPLE MARKET/TRACTIONPRODUCT DEAL TERMS View slide
  • Things To Get Before You Get On An Interview Call Pitch Deck and/or Executive Summary Academy.wasabiventures.com @wasabiventures NOTE: Great resources on the Training Workspace for making a list of gap questions and also how to review a deck. 1 2 4 3 List of things that are missing that you will need to ask for from the founder List of questions that will fill in the gaps Understanding of the team and their backgrounds View slide
  • Asking The 5 Trap Questions Academy.wasabiventures.com @wasabiventures Meant to really get all of the details you need from the founder’s vision Questions that are at the core of an Early Stage startup Answering them in a competent way is more important than the answer
  • Question #1: Tell Me About Your Team How Many People Are There? Answer has to be less than 10 How Are The People Compensated? Equity? Cash? Both? Academy.wasabiventures.com @wasabiventures Do They Cover All Functional Areas? Any engineers involved? Any business folks? Have They Ever Been A Part Of A Startup Before? Do They Have Other Jobs? NOT A RED FLAG, we actually like it!
  • Question #2: What Is Your Cap Structure? How Many Shareholders Do They Have? Should only be held by the founders if it is a seed round or incubation candidate. Can’t have more than 10 if it is an A round. Academy.wasabiventures.com @wasabiventures Who are the non-founder shareholders? Relatives? Friends of ours?
  • Question #3: How Do You Plan to Make Money? Are they already making money? If so, GOOD! How much and how did they make it? If not, does it make sense what they say? Red Flag Answers Advertising? “We aren’t sure” “It should just happen because our product is so cool.” Academy.wasabiventures.com @wasabiventures
  • Question #4: Who Do You Consider Your Biggest Competitors? RED FLAGS: “We really have no competitors.” “We are doing something that has never been done.” “Lots of people are in this space, but we are just going to be better.” Academy.wasabiventures.com @wasabiventures Do they understand their competitive market? Are they experienced enough to have looked at the WHOLE market?
  • Question #5: How Much Money Are You Looking To Raise? Academy.wasabiventures.com @wasabiventures Only applicable if it is an investment due diligence. Do they have a lead investor and if so, who is it? If it is less than $100K, probably not a good investment but could be a good incubation candidate. Is the $$ over $1MM, if so, probably not that interesting to us.
  • Learning The Easy “No’s” Already raised and spent more than $200K and have no paying customers or revenue sources Academy.wasabiventures.com @wasabiventures 1 2 4 3Team is not all geographically located together No one on the team is technical and they are paying cash for engineering NOTE: This could make them a perfect candidate for incubation. Any piece of data they give you that you are 100% sure is a lie
  • Few Key Thoughts You should be looking for a reason to say “no” Academy.wasabiventures.com @wasabiventures Be conscientious of time, it is the most important commodity for a startup If you don’t understand something, ask Always trust your gut