How To Deal With Angel Groups

Published: 10/31/2007 3:13:38 PM

As part of a continuing series on obtaining financing from angel groups, today's topic is about dealing with due diligence issues.

Once an angel group has indicated an interest in investing in your company, they will then start looking deeper.  Because there are usually several angels who are interested in a deal, they will need to decide who is going to perform the due diligence.  Sometimes it will be one person, sometimes they will divide it among several angels, based on their individual expertise.

It is critical to cooperate with them and show them everything.  It looks bad if they get to the end of the diligence process and find the proverbial "skeleton in the closet," so it really behooves you to show them everything up front.

If you have extremely sensitive technology, it would be appropriate to only show it to one angel and ask them to sign an NDA.  Assuming all goes well, the angel would report back to the group that there are no problems with the technology.

Anything you can do to make the due diligence process run more smoothly is greatly appreciated by your potential investors and business partners.  I've seen ver organized startups have non-proprietary documents converted to PDF files and available in a password-protected online for easy angel access.

Keeping the due diligence part of the process organized and well-run also indicates that you understand the investment process and is a good overall indicator of your level of organization.

Don Jones



Don Jones
CEO, VentureDeal

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