#457: How To Do Your Due Diligence Before Investing
Never miss another interview! Join Devin here: http://bit.ly/joindevin. Read the full GoodCrowdinfo article and watch the interview here: http://bit.ly/2bGCbKb. Subscribe to this podcast on iTunes by clicking here: http://bit.ly/ymotwitunes or on Stitcher by clicking here: http://bit.ly/ymotwstitcher. ---------------- Hundreds of millions of Americans who have been statutorily and practically prohibited from investing in startups are now allowed to do just that under two new regulations. The 2012 JOBS Act created new rules for Regulation A offerings and Regulation Crowdfunding. Neither requires investors t o meet a specific net worth or experience requirement. Common sense suggests it is time to ask the expert how to do “due diligence” on a startup investment. Todd Crosland, CEO and Founder of Seed Equity Ventures, offers some advice on conducting proper due diligence. He suggests exploring each of the following questions: Is there at least a minimum viable product or prototype with proof of concept? If possible, you’ll want to use the product. If not, you should at least see it. If there isn’t a working prototype, be sure to ask yourself if you are prepared to invest at such an early stage. The answers to the other questions should be overwhelmingly favorable before investing in what amounts to a business plan. Is there any initial traction with active users? It is possible to have an active community without a product, but generally some type of minimum viable product will have to be in the market to prove the concept in the market. If the product is available and there isn’t an active user community, it may be time to move along. Are there at least two full time team members? Experienced investors have seen this movie before. A lone wolf entrepreneur fails because he can’t share credit, can’t delegate, can’t work well with other people or just thinks he can do it all himself. Look for a solid, committed team before you commit your hard-earned money to the deal. ---------------- Read the full GoodCrowdinfo article and watch the interview here: http://bit.ly/2bGCbKb. Need a crowdfunding speaker? Learn more about Devin Thorpe at http://devinthorpe.com.