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How to pass venture capitalist due diligenceThere are two main types of venture capital due diligence.The types of due diligence are business due diligence and legal due diligence.These represent aspects of an investigation that a potential investor or venture capitalist will want to conduct before investing in a potential company or business opportunity.There are many tools that are available to use in conducting due diligence but the basic structure is broken down into two parts.
Legal Due Diligence The second half of due diligence focuses on the legal structure of any prospective company.Venture capitalists or investors will also have their lawyers conduct a legal due diligence.A prospective company that is being looked at for investment should expect to receive a due diligence checklist from the venture capitalists attorneys.This will request lots of information about the company. Yet the prospective company will want to make sure their legal documents are all in order.Delaying this action can taint the deal or potentially even kill it!The company being investigated will also want to have an experienced attorney representing them that knows how to handle this matter quickly and accurately.Some of the documents that can be requested in legal due diligence's are:
These legal documents are called for in the event that the company may be carrying legal fees or possible litigation that a potential investor would want to know about before assuming any ownership into the company. Most venture capitalists do not expect to find all potential business opportunities with no legal entanglements.Obviously though a company with few or no legal problems presents a better risk to potential investors or venture capitalists. The above lists are only a partial description and serve only to indicate documents that may be called for.A company that is looking for venture capital can do a few things to increase their chances for investments from potential investors.Some of these things are:
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