Breaking Down a Typical VC/Startup Diligence Process


Below is my general outline for a typical diligence process.

First meeting

When I’m meeting a startup for the first time, my goal is to understand as much about the business and team as I can.

After the first meeting

After a startup has left and I’m “doing diligence,” I want to test some of the assertions made by the company.

Second and third meetings

Follow up meetings are dedicated to metrics and the future.

Additional meetings/Full partner meeting

At this point, I’m really interested and I’m trying to understand the investment risks better.

After the term sheet:

After the term sheet is signed, the lawyers step in.

Each fund raising process is unique. Sometimes investors will have deep experience in a sector or know the team very well both of which can accelerate the process significantly. But I hope this general outline sheds light on the key steps and questions answered in the fund raising process.

Published 2013-04-02 in Fundraising 

I am a partner at Redpoint. I write daily, data-driven blog posts about key questions facing startups. I co-authored the book, Winning with Data. Join more than 20,000 others receiving these blog posts by email.

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