What are the key steps to prepare for a seed funding due diligence process?

2 Organize your documents

The second step to prepare for a seed funding due diligence process is to organize your documents and files that investors may request or review. These may include your financial statements, projections, business plan, customer contracts, user feedback, legal agreements, intellectual property, and cap table. You should have these documents ready in a secure and accessible format, such as a cloud-based folder or a data room. You should also label them clearly and update them regularly.

3 Do your own research

The third step to prepare for a seed funding due diligence process is to do your own research on the investors you are approaching. You should know their background, portfolio, investment criteria, and preferences. You should also research the market trends, competitors, and benchmarks that are relevant to your industry and niche. This will help you tailor your pitch, anticipate their questions, and address their concerns.

4 Be transparent and honest

The fourth step to prepare for a seed funding due diligence process is to be transparent and honest with your investors. You should not hide or exaggerate any information that may affect their decision or valuation. You should also disclose any challenges, risks, or gaps that you are facing or expect to face in the future. You should explain how you are solving or mitigating them and what kind of support or guidance you need from investors. Being transparent and honest will help you build trust and credibility with investors and avoid any surprises or conflicts later.

5 Seek feedback and follow up

The fifth step to prepare for a seed funding due diligence process is to seek feedback and follow up with your investors. You should ask for their opinions, suggestions, and questions after your pitch or meeting. You should also thank them for their time and interest and keep them updated on your progress and milestones. You should also respond to their requests or queries promptly and professionally. Seeking feedback and following up will help you improve your pitch, show your commitment, and maintain your relationship with investors.

6 Negotiate your terms

The final step to prepare for a seed funding due diligence process is to negotiate your terms with your investors. You should have a clear idea of how much money you need, how much equity you are willing to give, and what kind of deal structure you prefer. You should also be aware of the market standards, the valuation methods, and the legal implications of your terms. You should be confident and realistic in your negotiation and be ready to compromise or walk away if necessary. Negotiating your terms will help you secure a fair and favorable deal that aligns with your goals and values.