Friendly Reminder: Due Diligence

The recent events around FTX are a reminder that any investment requires appropriate due diligence. Here are a few tips on where to start:

1. Search the web and social media for the founder team, the company, its products and services and - if available - key employees. This may reveal things that people don't tell in business meetings.
2. Request the company to prepare a proper data room and read everything in the data room. You should not cut a check based on a teaser document.
3. Read the cap table and verify its correctness. Cap tables are often wrong. Classical errors include rounding errors and not properly reflecting the fully diluted view.
4. Ask the company to explain what they do and how they make money. Ask the founders and key employees separately, in search for a consistent story and understanding of the business.