Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups

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Angel Investment Due Diligence Checklist

Internal Due Diligence Checklist

Company Overview

• Articulate the “equity story” here (i.e., why the company is on to something and why its stock will appreciate greatly). Is it compelling?
• Does the company engage in thorough business planning?
• Does management have a clear understanding of the challenges it faces and a realistic plan to address them?
• Are there any skeletons in the company's closet from previous activities (e.g. outstanding liabilities, unassigned IP)?

Management Team

• Are all resumes and personal references available?
• What key strengths does the management team have collectively and individually?
• What holes are there in the team and how/when might they be filled?
• Have there been any disgruntled employees and, if so, why? Do these employees cause any tangible risk going forward?
• What strengths does the Board bring to the company? How might it be augmented?
• Is there a Board of Advisors, and, if so, how active is it?

Marketing

• Does the company have a well-defined sense of what its true market is?
• Is this market sufficiently large and fast-growing to be attractive?
• Is the company's market generalized or niche?
• If generalized, does the company stand out from competitors?
• If niche, will the company dominate sufficiently either to build attractive cash flow or be bought by a larger firm?
• Is the company the leading firm in its market? Market share?
• What barriers to entry does the company enjoy? How long-lasting are they?