This article is part of an ongoing series on Due Diligence. To learn more about performing due diligence quickly and effectively, download this free eBook today Stones Unturned: An Investor's Guide to Due Diligence in Early Stage Companies or purchase our books at Amazon.com.
In addition to articles and eBooks, the Seraf Compass makes various tools and checklists available for anyone to use.
As readers of our various articles know, we believe no diligence topic is more important than the evaluation of the team. So it comes as no surprise that we do not leave that important area to chance. In addition to formal direct management assessment interviews, we are also big believers in reference checking. Over the years we have developed and refined a Management Assessment Questionnaire for our investors to use when checking references while evaluating management teams.
During the due diligence process, personal reference checks are a critical step to help prospective investors learn more about a CEO and his/her team. Some of the references will be from contacts that the team provides to you. Other contacts should be “blind” reference checks with people in your network that know the team. This type of background information is useful if you ask the right questions. At Launchpad, we have a well-defined set of questions we use for our interviews. It makes a handy guideline you can use when calling the references; feel free to share it with your due diligence colleagues.
These questions help us uncover red flag issues that we need to keep an eye out for, and it helps us apply resources to help the CEO be successful. This questionnaire is designed to get the story behind the CEO and his/her team. If you are able to make enough reference calls, you should be able to find similarities and differences to help you paint a pretty good picture of the team you are investing in.
For more on the due diligence process, download this free eBook Stones Unturned: An Investor's Guide to Due Diligence in Early Stage Companies or purchase our books at Amazon.com.