Due Diligence

What is the due diligence process?

The due diligence process in the fundraising process includes the examination of the target company by potential investors for opportunities and risks.

The types and content of audits can vary depending on the target company and associated business model, but some topics are relevant to every due diligence.

To make the process as efficient as possible, it is important for founding teams to know and professionally prepare all relevant documents and audit content.

Types of due diligence

Financial Due Diligence
Financial due diligence is the process of assessing a potential investment's financial viability. This type of due diligence typically includes reviewing financial statements, tax returns, and other financial information to ensure that the investment is likely to be profitable.

Market Due Diligence
Market due diligence is the process of assessing a potential investment's market viability. This type of due diligence typically includes conducting market research, analyzing market trends, and assessing the competition to ensure that the investment is likely to be successful.

Technical Due Diligence
Technical due diligence is the process of assessing a potential investment's technical viability. This type of due diligence typically includes reviewing technical specifications, assessing manufacturing processes, and testing products to ensure that the investment is likely to be successful.

Legal Due Diligence
Legal due diligence is the process of assessing a potential investment's legal viability. This type of due diligence typically includes reviewing contracts, assessing liability risks, and researching regulatory requirements to ensure that the investment is likely to be successful.

Reputational Due Diligence
Reputational due diligence is the process of investigating a company's reputation in order to assess its risk of damage to its reputation. This type of due diligence is typically conducted by public relations or marketing professionals. Reputational due diligence can help to identify potential risks to a company's reputation, such as negative media coverage, social media crises, or stakeholder unrest.

Read our article on Due diligence in fundraising: types and documents .

The due diligence checklist with the most important documents for due diligence in the areas of legal, human resources, marketing & sales, product, IT, quality assurance, operational controlling, finance, market & competition can be downloaded below .