84 Questions to Ask During Diligence

Team questions:
● What led to the formation of this company?
● Does the team have operating experience to measure?
● What is the quality of the previous operating experience?
● Do they have prior experience managing teams?
● What are the founders’ unique skillsets to tackle this problem?
● Do the founders have complimentary skill sets?
● Can the founders work together?
● How did the founders meet?
● What is the expected window of opportunity for each founder (how long can they go with suppressed income)?
● Is this an authentic idea that is true to the founders’ passion or a hollow attempt to make money?
● Have the founders hired somebody before?
● Do the founders have a network that allows them access to talent?
● Are the founders charismatic enough to attract talent?
● Are the founders based in a market that allows them access to talent?

Business questions:
● Is the business model clear?
● Who within the organization are you selling to?
● Why do users care about the product / service you are offering?
● Does the targeted person / role have authority to make purchasing decisions?
● What is the value proposition?
● Is the value created easy to measure or will it take time to market the ROI?
● What organizations / people are you selling to?
● What is the customer profile (role within the organization; demographics)?
● What steps need to happen in order for a buying decision to be made?
● Will target customers be able and willing to pay a fair price for your product?
● Who is the largest customer today?
● Who are the competitors?
● Are you a first mover?
● Is the product better, cheaper, or faster than existing solutions?
● Is the product incrementally better or 10x better than alternatives?
● What features do you offer that your competitors do not?
● Why do your users care about these features?
● What is your competitive advantage?
● How defensible is this advantage?
● How easy is it to replicate your competitive advantage?
● Why would a buyer leave a competitor for you?
● Is the company building on top of other platforms?
● What is their relationship with the platform they are building on top of?
● Are product plans in the direct path of the platform, or is it complementary?

Market questions:
● Are you selling into an existing market, or are you creating a market?
● Is the market large enough to for the company to capture a significant chunk of it?
● What are the megatrends over the past 24 months that lead you to believe this is an expanding market?
● Is there a shift in consumer behavior that strengthens this market?
● What are the barriers to entry?
● How strong are the barriers to entry?
● Are there regulatory challenges within the sector?
● Has investor interest increased or cooled off over the past few quarters?
● Have investors already invested in a competitor?
● Is the timing right and why?
● Have other similar companies been formed before?
● Why have other similar companies failed?

Tech questions:
● How much progress has been made towards product development?
● Does the company have to create new tech, or are they building off of existing infrastructure?
● Has the product been built in house, or is it outsourced?
● Who is in charge of development?
● Are there any patents pending or issued?
● What is the product roadmap, and what new features are users asking for?
● Is the product roadmap realistic and can it be executed in the proposed timeframe?
● Can the largest customer influence pricing, product roadmap, etc.?

Financial questions:
● How much money does the company have in the bank?
● What is the current monthly burn?
● What is the burn rate going towards?
● Does the company have enough time to meet its proposed goals?
● How much runway does the company have before requiring additional money?
● Is revenue assumed, or is there evidence that people / customers will buy your product /service?
● Are customer contracts prepaid or not?
● Are there different pricing tiers?
● If there are different pricing tiers, which tier is most popular?
● What metrics are you tracking?
● How have these metrics changed over the past year?
● Why are you focusing on these metrics?
● What is the trailing top line growth over the past year?
● What are the projected growth rates?
● What assumptions are driving growth rates?
● What percentage of revenue does the largest customer contribute?
● How were existing customers / clients sourced?
● What are the churn / retention numbers?
● Have much of the company is still controlled by the founders?
● How large is the ESOP (employee stock option plan)?

Strategy questions:
● How are you planning to market to the specific users you are targeting?
● What is your customer acquisition strategy cost today, and how do you see this strategy evolving?
● How are you recuperating the acquisition costs?
● Is there an opportunity to up-sell or cross-sell, or will LTV of the customer be derived from recurring revenue streams?
● What steps are being taken to ensure you are solvent enough to reach your next milestones?
● What are the biggest holes in your business today, and what steps are you taking to fill them?