Investor Due Diligence : Beyond the obvious


Everybody talks about the Investor Due Diligence when fundraising. Entrepreneurs and enthusiasts talk about how to raise money all the time. The question ‘ What Investors look for?’ has been beaten to death.

I decided to publish some questions that usually miss the eye. On my musings with investors, here are a few things I’ve learnt that to most people are beyond the obvious:

  1. If things are unclear at first, they will ask for clarifications. if they are still unclear, they won’t invest. Be concise and precise. Practice your pitch.
  2. They want to know if you are a quick learner. Gets you brownie points if you are over prepared by the second meeting.
  3. Do you really know what the customer wants? Have you dig deep into their psyche?
  4. They prefer business models that work (Mostly built using rapid testing and intuition)
  5. Personality traits they would look for: Frugal, not arrogant, coachable, driven, trustworthy, resourceful.
  6. They ask ‘Others’, – partners, associates, analysts, thought leaders, experts in particular industries for opinions. So you need to be presentable and so does your website or app. Practice your pitch and Impress everyone that you come across.
  7. They might ask for access to your Google analytics, Asana/Trello boards, GitHub repositories. so be ready, always stay organized. This will anyway help you work more efficiently. If you don’t agree to share, it’s a red flag.
  8. If there’s no Team profile on the website or Social media, it’s a red flag.
  9. They will often reach out to your customers or profiles that match your customers and ask them for an opinion.
  10. They don’t necessarily invest in momentum. You might be getting 500 sign ups a day, but it could be temporary. While good momentum is a positive sign, focus on the long term
  11. Who else is in on the deal? Typically, Novice and small investors want to invest with bigger players, and they will follow the deal if you have bigger fish in the net.
  12. They invest in Founders who are able to connect with them and can have actual conversations. Being a good speaker helps.


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