Preparing for Investor Due Diligence in India: A Startup Founder’s Handbook

1. Preparing for Investor Due Diligence in India: A Startup Founder’s Handbook Are you an Indian business entity or startup seeking investment? If so, one of the most significant steps is preparing investor due diligence in India. What is Due Diligence? Due Diligence is the thorough process for startups used to assess the potential risks and rewards of investing in the venture. It is a time-consuming and comprehensive process conducted by professional due diligence experts to increase the chances of the businesses of securing the capital they need. Startup Due Diligence Guide Organize Financial Records: The main aim of this process is financial transparency. Investors will want to assess the startup’s financial health and sustainability. The process includes evaluating the revenue streams, expenses, cash flow and profitability. It is important to have the financial statements in order. Legal Compliance: One of the main points in the founder’s due diligence checklist is to ensure legal compliance. The investors need to be certain that the business is operating legally and within the regulatory norms. In India, this includes having all the required business licenses, registrations and intellectual property protections. If your startup has not yet secured these, it is essential to do so before you begin fundraising. Prepare detailed business plan and strategy: Investors want to understand the business plan. It includes the growth and scalability plan. Having a good business plan with market analysis, growth strategy and financial projects will appeal to investors instantly. When seeking how to prepare for investor due diligence, one of the most important things is to prepare a detailed business plan. The plan must cover how you will use investment and the expected return on investment. Provide clear ownership and Equity Structure:Investors’ due diligence for startups and businesses in India includes close examination of ownership and equity structure. This is to determine if there are multiple co-founders, advisors or investors involved in the startup. Uncertainty in the shareholding structure can raise red flags. Address debt and liabilities: Startups, especially in their early stages, may have debts, liabilities or outstanding payments. Investors will review any existing debt or liabilities that could affect the business’s financial health or future cash flow. Verify Intellectual Property (IP) Rights: IP can be an important asset for businesses like tech, software or product development space. Investors want to ensure that your IP is properly protected and not hampered by legal issues. Operational Review Preparation: Investors will look into how your business operates daily. They will want to understand your supply chain, key partnerships, customer

2. relationships and team structure. A well-functioning and efficient operation appeals to investors. Good Team: Investors invest in your team as must as ideas. In the startup funding checklist in India, preparing the team is equally important. Investors will want to know about the team’s experience, skills and ability to execute the vision of the company. Ensure your team is aligned and ready for investors’ due diligence. Investors’ due diligence is a hard but essential part of the fundraising process. It is not about showing what is good about your startup but it is about showcasing how you handle challenges and reduce risks. For fundraising preparation in India, work with a good due diligence service provider to help you navigate the investor’s due diligence with confidence. Source:- https://www.weekly5ideas.com/a-founders-guide-to-prepare-for-investor-due-diligence-in- india/