https://eurodataroom.com/fundraising-due-diligence-checklist/
Due diligence is an important aspect of fundraising but it can eat up precious time that should be used by the founders on their business. It’s also difficult to handle the continuous flow of requests from investors for information, which can create delays in closing a funding round.
The level of due diligence in fundraising differs depending on the stage of a start-up and the type of investor. For instance, a seed stage company must be prepared disclose details to equity investors such as venture capital companies and angel investors, while later-stage companies might need to satisfy institutional investors with more rigorous due diligence.
Tools that automatize these searches will reduce the burden on staff and the time required for due diligence in fundraising. Donor prospecting and screening software, for instance can automatically search the web for public data on donors and their businesses and associations. This will cut down on time and effort compared to manual research and ensure that all risk factors are covered.
In addition to conducting searches for information on a potential investor, fundraising due diligence also involves establishing policies on the types of donations an institution will or cannot accept. These policies may include guidelines that limit an individual donor from having influence over the staff of the institution or trustees or programs.