We’ve been investors and investees and, of course, as investors we conduct due diligence when we are considering investing in a team or a business. This DD gives us the confidence that we are making the right decision to invest.
Investment is about far more than investing and risking capital. It’s about a relationship, trust, team spirit and aligned goals and outcomes.
Teams considering taking investment should do their own DD too. Investors will point potential investees towards their existing portfolio but I would encourage Investees to look far beyond that for candour. Can the investor introduce them to previous partners where they have been through the full life cycle of an investment together…? Would they recommend the investor as a true partner in the good times and the bad? Do they feel that the investor consistently added value beyond capital introduction? At exit, were all parties collegiate and honourable? Most importantly, would they work with the investor again even though they now need the capital less!