Chapter 6 | Do Your Due Diligence
Disclaimer: The Content is for educational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this publication constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments.
"You wanna know what I do?
Study, study real hard."
Rapsody - Power
This line emphasizes the importance of studying and gaining knowledge. As an informed investor, thorough due diligence involves investigating every aspect of a potential investment opportunity, including the company's financials, management team, market, and competitive landscape. By "studying real hard," investors can make well-informed decisions and mitigate the risks associated with their investments. Rapsody's lyric highlights the value of putting in the work and research to achieve success, which is a critical aspect of being an informed investor.
When it comes to performing due diligence, this is the next level of being a great investor. You want to ensure you are making not only an educated investment but a highly informed one. This is where you get to do your homework as an investor, diving deep into understanding whether the claims made by the startup and the founders on their campaign are accurate, believable, and trustworthy. This requires extra effort on your part as an investor since you can't solely rely on what is included on the campaign page.
To conduct your due diligence, there are numerous approaches. In the pitch deck provided by the entrepreneurs, they will have listed their market size, the market opportunity, and the growth of that market. It's straightforward to perform a Google search to investigate that market and conduct your research to determine if the market is growing at the rate the founder claimed. Verify if the sentiments expressed in various reports, articles, and research align with what the founder outlined in their presentation.