Due diligence is a crucial element in fundraising processes, and it can uncover serious risks that might otherwise be overlooked. It’s also a method to demonstrate a company’s professionalism and effectiveness. A well-organized dataroom that contains relevant documentation for their evaluation can make a big difference in the final outcome of your investment.
Investors will likely scrutinise your business’s finances and legal documents, as well as important personnel, employment contracts and suppliers. They will also examine the lawfulness of your intellectual property portfolio, and may require evidence of ownership. If you have licensed, contracted or leased your IP rather than owning it and owning it, you must divulge this information to investors since it will affect the value of your business.
In the age of the internet the news media is fast-moving and reputational damage can last for a long time especially for non-profit organizations. To avoid these risks fundraising due diligence should not be thought of as a one-off process performed only on single prospects. It should be a continuous and broad-based ongoing process, with a multitude of potential investors being investigated at the same time.
To be effective the due diligence for fundraising must include research across a variety of publicly available online sources. The research should be organized into clear, easy-to-read, and comprehensive reports which are easily reproducible. Automated platforms are the ideal solution to this demanding need. Human teams can’t always fulfill it. They can search millions of due diligence and fundraising processes public data sources, disambiguate and cross-reference quickly. They can present digestible, categorised reports that are then tailored to the specific requirements of each prospect’s decision-making.