Blog

November 3, 2016

Our due diligence process

When TAF partners decide that a due diligence is appropriate, we ask the entrepreneur to make a data room available to the due diligence team with the information listed below.

  • Pitch deck, [*]
  • Executive team resumes,
  • Business plan,
  • Sales pipeline or marketing plan,
  • Contracts,
  • Contact of 2-3 reference customers,
  • List of top industry associations and trade publications,
  • Financial statements, [*]
  • Cap table on a fully diluted basis, including options, warrants and securities,
  • Shareholder agreement,
  • Term sheets,
  • Board meeting minutes,
  • IP, including patents, IP license agreements and claims, and
  • Certificate of incorporation.

[*] TAF will retain a copy of those documents in its archive post-due diligence.

 

Through a review of the material in the data room and discussions with the CEO, exec team and references, the due diligence lead is able to cover the key aspects of the due diligence:

TEAM:

  • CEO: caliber, listening skills, and appetite for risk / exit,
  • Leadership team: caliber, complementarity, and compatibility,
  • Advisors: caliber, complementarity, and influence,
  • Board Directors: caliber, governance, and ethics, and
  • Ability to attract talent and create an effective culture.

 

BUSINESS:

  • Market: must-have, value chain, and company positioning,
  • Product: roadmap, competition, and defensibility,
  • Scale: growth drivers, predictability, and velocity,
  • Business model: revenue, go-to-market, and pricing, and
  • Efficiency: cost, supply chain, and margin.

 

FINANCING:

  • Deal: terms, milestones, and general attractiveness,
  • Lead investor: reputation, board experience, and ethics,
  • Future rounds: roadmap, dilution, and general attractiveness,
  • Exit: best case, worst case, and timing, and
  • Law firm: reputation.

 

MATCH W/ TAF:

  • How can our relationships support the business?
  • Are we aligned in our thinking around an exit?
  • What role do we want to play post-financing?

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