Due diligence never has a good connotation. For companies raising money and management teams words like painful, slow, tedious, and torture come to mind. Pick your adjective. For investors, words like tedious, eye opening, boring and critical come to mind. Due diligence is critical to help VCs derisk our investments a bit.
I recently read a fabulous (now that is a word you never associate with due diligence!) article on the process. It was published by Lisa Suennen (I do not know Lisa) on PE Hub and is here. Lisa’s post includes a slide deck that explains her vision of due diligence as a 12 step program; this is clearly relevant as due diligence will drive anyone to the bottle! The slide deck is here.
The wonderful thing about Lisa’s presentation is that she asks questions throughout her entire deck. And they are the right questions. Preparing for due diligence using this presentation as a guide will greatly reduce the pain of going through the due diligence process. For companies raising funds and management teams, I suggest getting your ducks in a row in advance – create a separate folder in your investor file sharing system (dropbox or otherwise) for each category and then populate each folder with relevant materials and write-ups.
I hope this helps you survive due diligence! Have a great weekend.