Due Diligence: Time spent in Due Diligence matters! On average, Angel investors should spend around 20 hours on Due Diligence to achieve 2.6X ROI. Spending 20-60 hours dramatically increases this to 5.9X! Nearly all Due Diligence teams follow a comprehensive checklist to ensure they don’t miss anything. See NACO online resource Sample Due Diligence Checklist. https://www.nacocanada.com/cpages/angel-resources
Adding Value Through Due Diligence is the most popular NACO Angel Academy Course – Module 103
During Due Diligence, Angels seek to understand the character of the entrepreneur and gain insight into how the company works and what it needs to be successful. They also check for good hygiene – to make sure the company doesn’t suffer from any fatal flaws. The goals of Due Diligence include: • Helps each investor make a Go – No Go decision • Leads to negotiation of the specific investment terms • Builds a foundation for the future relationship between the parties • Identifies the coachability of the entrepreneur • Identifies if and how the Angels can add value to the company (in addition to the amount invested)
Angel Resource Institute Scorecard to Evaluate the Deal
Management Team – 30%
Sales Channels – 10%
Size of Opportunity – 25%
Need for More Funding – 5%
Product & Technology – 15%
Other – 5%
Source: Angel Resource Institute , Angel Investing Basics for the Startup Community
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| Introduction to Angel Investing: How to Start
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