2 min read How to Raise Funding Step 7: Closing the Investment
After initial interest, the investor often proceeds through due diligence and will ask for documents on your business, including legal entity filings, articles of incorporation, patent filings, tax returns, before closing the investment.
In any due diligence exercise, ninety-five percent of the documents will come from the startup any way therefore, it makes sense to start building what is called a due diligence box or data room, from the very start.
There are many checklists on the web that you can download and use as a guide to building out your list. For early-stage startups, there will be a number of documents that simply don’t exist. For example, if you don’t have a formal board of directors, there are no board of director reports to include in the data room.
One final word about due diligence: it’s for serious investors only.
A serious investor has had several discussions with you before asking for the due diligence, and there’s at least a soft-circled investment figure on the table. If the investor is not that far along, then it’s premature to hand over data room access. Continue discussing their interests and concerns before proceeding.
Read more on the TEN Capital eGuide: https://tencapital.group/how-to-raise-funding-eguide/
Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email: firstname.lastname@example.org