Start-Up Companies — Due Diligence Process

Depending on the "project" involved, there may be two approaches used: 1) A team will be selected to perform the due diligence process and/or 2) Individual investors will perform their own due diligence process. The company should expect the due diligence process to be completed professionally, highly detail-oriented, and extensive.

You can expect:

1. Interviews with Management and where appropriate the Science and Technology Officers
2. Document production (for example, if you say you are renting a space, then you should be able to produce the lease)
3. Reference checks: Personal, professional, and business.
4. Analysis of the business plan key assumptions used to make the projections made. This analysis will include, at a minimum:
   1. Competence, integrity and qualifications of the management team
   2. Market Analysis: Competition, industry, suppliers, sales, distribution and strategy
   3. Product or Service: Production and performance capability status
   4. Research and Development history and potential to include intellectual property
   5. Financial analysis: projections, capital requirements, cash flow forecast, balance sheet, income statement, capital requirements, assumptions used, risk/return analysis, and use of proceeds.
   6. Human Resource analysis: Employees, directors, and advisors
   7. Legal, governmental and contractual relationships

Depending on the availability of staff and of needed information, the due diligence process generally takes 2–6 weeks to perform.

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