www.eurodataroom.com/fundraising-due-diligence-checklist/

Due diligence is an essential element of fundraising however it can consume valuable time that should be used by the founders working on their business. It’s also difficult to keep up with the constant stream of investors’ requests for information, which can result in delays in closing the funding rounds.

The depth of due diligence in fundraising differs depending on the stage of a company’s development and the kind of investor. For instance, a seed-stage company must be prepared provide information to equity investors such as venture capital firms and angel investors, while companies at later stages may need to satisfy institutional investors by providing more rigorous due diligence.

Utilizing tools to automate these searches can help reduce the burden on staff and cut down the amount of time needed to conduct due diligence on fundraising. For example screening and prospecting for donors tools can automatically scan the web for public information regarding donors as well as their businesses or associations. This can cut down time and effort compared to manual research and ensure that all risk factors are covered.

Due diligence for fundraising does not consist of only searching for information on potential investors but also setting up policies on the kinds of donations an institution can accept or decline. These could include guidelines that prevent from accepting donations of money or property by extra-legal means and guidelines to prevent donors from exerting influence over an institution’s staff, trustees or programs; and guidelines regarding naming policies.