Due Diligence and Datarooms for Syndicate Leads

[Section 9] Essential Syndicate Skills: Due Diligence & Datarooms - Highlights

Due Diligence Checklist (Three Buckets):

1. Company Standing:
   
   • Verify incorporation, key hires, IP assignment, shareholder agreements, and vesting terms.
     
     
2. Company Diligence:
   
   • Review pitch deck, financials (historical + 24-month projection), burn rate, go-to-market strategy, roadmap, team structure, customer contracts, and cap table.
     
     
3. Investment Documents:
   
   • Examine past financing rounds, current investment terms, and instruments.
     

Investor Data Room (What to Share):

• Company Standing: Confirm registration but avoid sharing sensitive documents.
  
• Company Diligence: Share key hygiene factors—pitch deck, financials, product roadmap, and team structure.
  
• Investment Documents: Share current round details but exclude past financings.
  

Developing Investor-Ready Assets:

• Recorded Calls (founder & customer interviews)
  
• Working Documents:
  
  
  • Deal Qualification Document → Synthesizes diligence findings.
    
  • Investment Memo → Investor-facing summary.
    
  • Founder FAQ → Repurposed as an Investor FAQ to preemptively address concerns.
    

Decision Framework (Seven Factors for Screening Companies):

1. Product/Service: 10x better value proposition.
   
2. Market Size: Buyer segment, willingness to pay, overall potential.
   
3. Unit Economics: Value per sale, profitability.
   
4. Defensibility: Sustainable competitive advantage.
   
5. Traction & Growth: Key metrics (e.g., LTV, CAC, GMV, take rate).
   
6. Team: Commitment, domain expertise.
   
7. Valuation: Fair pricing relative to potential.
   

Key Takeaways:

• Higher Due Diligence Standard for Syndicates: Unlike solo angel investors, syndicate leads must ensure both deal quality and investor confidence by demonstrating thorough diligence.
  

Structured Diligence Process: Using a checklist ensures control, efficiency, and completeness.

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