The startup executive team should very early learn that due diligence is a two-way street.

After all, the investor is to become your long-term partner who would be taking strategic business decisions along with you or would be guiding your decisions. A person who is to influence your company financials and operations to a large extent, is without a doubt, worthy of being checked upon.

It is essential to differentiate between a true and genuine investor from the one who is out there for free information. Moreover, if your investor is a genuine one, he/she would be immensely happy with your efforts of an extensive due diligence on them.

This would reflect well on you as an entrepreneur who is highly concerned about their company, their idea, their product, in short, the difference that they can make to the business industry and their returns to the society as a whole. This would potentially be a win-win situation as many startups that investors encounter, give them a fresh feel with their company vision and values.

But, it is the rarest of the rarest scenarios wherein a startup has done their homework which is not only limited to gaining the investor’s perspective and portfolios but also, wants to be sure about the same by going a step ahead and validating or better authenticating them.

A due diligence request creates the perception for a sound investor that they are dealing with a savvy team. This impression is of significant value during valuation and investment negotiation.

Such a tactic would increase your probability of getting in front of a viable investor and strongly puts the message across that you cannot be taken for a ride and that your dream, your company, is no toy that can be controlled or sold as per anyone else’s will.

Article source: https://www.linkedin.com/pulse/turn-tables-your-investor-prateek-srivastava?trk=mp-reader-card