Due diligence is a critical element in fundraising processes, and can reveal significant risks that could be missed. It is also a great method to show your company’s efficiency and professionalism. A well-prepared dataroom containing relevant documents for their evaluation could make a huge difference in the outcome of your fund.
Investors will likely investigate your organisation’s finances and legal documents, as well as employees, key personnel, employment contracts and suppliers. Investors will also examine the legality of your intellectual portfolio and could ask for evidence of ownership. Investors should be aware that you have licensed or contracted to lease your IP, rather than owned it completely. This will impact the value and viability of your business.
In the digital age, news can quickly spread and reputational harm can be long-lasting, especially for nonprofits. To minimize the 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-ranging process that involves numerous potential investors.
To be effective the due diligence for fundraising must include research across a range of publicly accessible online sources. The research should be organized into clear, readable and thorough reports that can be easily reproduced. Automated platforms are the perfect solution to this arduous need. Human teams can’t always meet it. They can search millions of public data sources and decode, cross-reference and analyse them easily. They can provide digestible, categorised reports that are customized to meet the needs of the specific needs of each prospect.