Due diligence is the name we use to explain the process of evaluating an investment opportunity.
It’s where we take a deep dive, not only into the hypothesis, and technology, but also into the people. Typically our focus is investing from pre-seed through to series A and we aim to provide a capital pathway to larger funding rounds through follow-on investing into many of our portfolio companies.
So, what’s involved and what do we look for?
To start with – click here to read our guide of What We Look For.
When an idea first comes to us, we review it against our key areas of focus, and generally agree whether or not it fits into a mandated solution. From there, the process becomes more complex and while it is formulaic, because of the nature of deep tech, it’s also relatively bespoke.
A really interesting part of the due diligence process involves talking to the founding team and identifying key opinion leaders in ancillary areas – people who might end up using the technology or who could benefit from it being commercially available.
As an example: if we’re looking at deep tech in the area of health, we might talk to the surgeon and other healthcare providers as they need to be comfortable it will benefit their patients and the insurance companies or funders to ensure it will provide economic benefit.
Another element we consider, and we continually highlight this, is the team and their skillset and knowledge. In other words, examining whether they have broad enough knowledge, and the ambition, to bring the idea to fruition; and, whether they are willing to partner with their investors throughout the long journey to commercialisation. We refer to this part of our due diligence as dating to find out whether we’re compatible enough to get married to one another.
And then there’s analysing the ability to protect the product, which is often through patents or trademarks. While it may be a great idea, to be successful it generally needs to be unique and unexpected which can be tricky given we’ve been developing novel ideas and recording these for centuries.
It also needs to be financially viable. The idea might be great, but it also needs to be able to provide a return. As a venture capital company, we invest in deep tech for two reasons – one is to make an impact on the world we, and our future generations live in, and the other is to provide a financial return to the investors who have entrusted their capital with us.
