You can see in Shark Tank and other business shows how a well-crafted pitch can be destroyed if the past of a potential client is exposed. They could reveal an pending lawsuit, hidden credit card debt, or other issues that keep them from making a donation. This is known as due diligence or DD, and it’s what fundraising teams have to do to ensure that their prospective customers and donors protected from financial, legal and reputational risk get redirected here as well as compliance risks.
The amount of documentation and due diligence required for fundraising will differ based on the stage of your startup. It is important to remember that this is a crucial step in the growth of your business, particularly when you’re seeking funding from venture funds.
Investors will want to know the material risks that may prevent your business from achieving its full potential. Investors want to know the risk factors that could hinder your business from reaching its full potential.
Educational establishments and non-profit organizations also conduct due diligence on prospective donors to ensure that their purpose and values match with the philanthropic gifts they are seeking to make. They also look at the impact of a donation on an organization and its leadership and determine if any particular project is at risk from being taken over by a donor.
Establishing a clear uniform risk rubric that will guide the due diligence process of prospective donors will help you simplify DD efforts and accelerate the timelines for fundraising. This will allow your company to avoid having to restart after an unexpected setback or delay. Maintaining a dataroom “DD ready” can help reduce your legal expenses and ensure that you can provide potential clients with the information they need to make a decision.
