🔖Diligence Questions

Team

• What led to the formation of this company?

• Does the team have operating experience to measure?

• What is the quality of the previous operating experience?

• Do they have prior experience managing teams?

• What are the founders’ unique skillsets to tackle this problem?

• Do the founders have complimentary skill sets?

• Can the founders work together?

• How did the founders meet?

• What is the expected window of opportunity for each founder (how long can they go with suppressed income)?

• Is this an authentic idea that is true to the founders’ passion or a hollow attempt to make money?

• Have the founders hired somebody before?

• Do the founders have a network that allows them access to talent?

• Are the founders charismatic enough to attract talent?

• Are the founders based in a market that allows them access to talent?

Business

• Is the business model clear?

• Who within the organization are you selling to?

• Why do users care about the product / service you are offering?

• Does the targeted person / role have authority to make purchasing decisions?

• What is the value proposition?

• Is the value created easy to measure or will it take time to market the ROI?

• What organizations / people are you selling to?

• What is the customer profile (role within the organization; demographics)?

• What steps need to happen in order for a buying decision to be made?

• Will target customers be able and willing to pay a fair price for your product?

• Who is the largest customer today?

• Who are the competitors?

• Are you a first mover?

• Is the product better, cheaper, or faster than existing solutions?

• Is the product incrementally better or 10x better than alternatives?

• What features do you offer that your competitors do not?

• Why do your users care about these features?

• What is your competitive advantage?

• How defensible is this advantage?

• How easy is it to replicate your competitive advantage?

• Why would a buyer leave a competitor for you?

• Is the company building on top of other platforms?

• What is their relationship with the platform they are building on top of?

• Are product plans in the direct path of the platform, or is it complementary?

Market

• Are you selling into an existing market, or are you creating a market?

• Is the market large enough to for the company to capture a significant chunk of it?

• What are the megatrends over the past 24 months that lead you to believe this is an expanding market?

• Is there a shift in consumer behavior that strengthens this market?

• What are the barriers to entry?

• How strong are the barriers to entry?

• Are there regulatory challenges within the sector?

• Has investor interest increased or cooled off over the past few quarters?

• Have investors already invested in a competitor?

• Is the timing right and why?

• Have other similar companies been formed before?

• Why have other similar companies failed?

Technology

• How much progress has been made towards product development?

• Does the company have to create new tech, or are they building off of existing infrastructure?

• Has the product been built in house, or is it outsourced?

• Who is in charge of development?

• Are there any patents pending or issued?

• What is the product roadmap, and what new features are users asking for?

• Is the product roadmap realistic and can it be executed in the proposed timeframe?

• Can the largest customer influence pricing, product roadmap, etc.?

Financials

• How much money does the company have in the bank?

• What is the current monthly burn?

• What is the burn rate going towards?

• Does the company have enough time to meet its proposed goals?

• How much runway does the company have before requiring additional money?

• Is revenue assumed, or is there evidence that people / customers will buy your product / service?

• Are customer contracts prepaid or not?

• Are there different pricing tiers?

• If there are different pricing tiers, which tier is most popular?

• What metrics are you tracking?

• How have these metrics changed over the past year?

• Why are you focusing on these metrics?

• What is the trailing top line growth over the past year?

• What are the projected growth rates?

• What assumptions are driving growth rates?

• What percentage of revenue does the largest customer contribute?

• How were existing customers / clients sourced?

• What are the churn / retention numbers?

• Have much of the company is still controlled by the founders?

• How large is the ESOP (employee stock option plan)?

Strategy

• How are you planning to market to the specific users you are targeting?

• What is your customer acquisition strategy cost today, and how do you see this strategy evolving?

• How are you recuperating the acquisition costs?

• Is there an opportunity to up-sell or cross-sell, or will LTV of the customer be derived from recurring revenue streams?

• What steps are being taken to ensure you are solvent enough to reach your next milestones?

• What are the biggest holes in your business today, and what steps are you taking to fill them?