due diligence

due diligence

How To Do Your Due Diligence Before Investing

17h ago
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Never miss another interview! Join Devin here: http://bit.ly/joindevin. Read the full GoodCrowdinfo article and watch the interview here: http://bit.ly/2bGCbKb. Hundreds of millions of Americans who have been statutorily and practically prohibited from investing in startups are now allowed to do just that under two new regulations. The 2012 JOBS Act created new rules for Regulation A offerings and Regulation Crowdfunding. Neither requires investors t o meet a specific net worth or experience requirement. Common sense suggests it is time to ask the expert how to do “due diligence” on a startup investment. Todd Crosland, CEO and Founder of Seed Equity Ventures, offers some advice on conducting proper due diligence. He suggests exploring each of the following questions: Is there at least a minimum viable product or prototype with proof of concept? If possible, you’ll want to use the product. If not, you should at least see it. If there isn’t a working prototype, be sure to ask yourself if you are prepared to invest at such an early stage. The answers to the other questions should be overwhelmingly favorable before investing in what amounts to a business plan. Is there any initial traction with active users? It is possible to have an active community without a product, but generally some type of minimum viable product will have to be in the market to prove the concept in the market. If the product is available and there isn’t an active user community, it may be time to move along. Are there at least two full time team members? Experienced investors have seen this movie before. A lone wolf entrepreneur fails because he can’t share credit, can’t delegate, can’t work well with other people or just thinks he can do it all himself. Look for a solid, committed team before you commit your hard-earned money to the deal. Have any team members successfully founded companies in the past? While many first time entrepreneurs are successful and some who have been successful in the past, miss on subsequent efforts, you improve your odds of making a good investment by finding teams that have been successful before. Read the full GoodCrowdinfo article and watch the interview here: http://bit.ly/2bGCbKb. Need a crowdfunding speaker? Learn more about Devin Thorpe at http://devinthorpe.com.