GUI Dawn: What are the two-way due diligence of entrepreneurs and VC?

The investigations inclusive VC and enterprises through communication, if VC is interested in your business, in order to ensure the smooth conduct of bilateral cooperation, VC will provide an investment agreement terms (Term Sheet). After the negotiations have reached agreement and signed, they will then have to do a thorough investigation, namely due diligence. In addition, enterprises should do full due diligence before choosing VC. Entrepreneurs should accept a VC investment before, as much as possible to understand the situation of the VC through communication, if VC interested in your business, in order to ensure the smooth progress of both sides, VC will often issue an investment agreement terms (Term Sheet). After the negotiations have reached agreement and signed, they will then have to conduct a detailed investigation, namely due diligence (Due DILIGENCE,DD), including business, personnel, finance, law and so on.　　Due diligence requires the prior consent of both parties, the purpose of which is to understand and confirm the facts of the communication between the two parties, assess the risk after the investment, but also in order to be able to provide targeted value-added services after the investment. In addition, enterprises should make full due diligence before choosing VC. The entrepreneur should know the VC as much as possible before accepting the investment of VC. Entrepreneurs need to verify whether VC really can provide value-added services, the easiest way is to have accepted this VC investment entrepreneurs to chat, this is not a very difficult thing.　　Entrepreneurs need to know whether the VC has the confidence of the entrepreneur, whether it is difficult to deal with, how fast it responds to the company's problems, what assistance it has provided, how far it is involved in the company's business, and whether the follow-on financing can help. Entrepreneurs need to ensure that this is a long-term cooperative, but also easy to get along with the VC. If you know that the VC you contacted has never done venture capital before, then your next cooperation is likely to face many problems.　　Entrepreneurial enterprises will inevitably encounter many twists and turns, not prepared for the VC will be the relationship between the entrepreneur and the serious tension, even if the middle of the withdrawal of funds.　　VC's content of due diligence in enterprises VC due diligence content generally includes the following aspects: Management background checks;　　Market assessment;　　Sales and procurement;　　environmental assessment;　　Production operation system;　　Internal management;　　The method of financial forecast and the accuracy of past forecast;　　The assumptions of sales volume and financial forecast;　　Verification of financial statements, sales and purchases of bills;　　Current cash, accounts receivable and debt status;　　Loan situation;　　Asset verification;　　(b) The arrangements for wages and benefits and retirement funds;　　Leasing, sales, procurement, employment and other aspects of the contract;　　Potential legal disputes. VC will make a comprehensive and in-depth review of the history data, documents, management personnel background, market risk, management risk, technology risk, capital risk and legal risk. If VC insideDepartment does not have a knowledgeable professional, they may also invite external consultants to make an assessment of the market and technology. Financial due diligence is usually done by a professional auditor who will produce a professional accountant's audit report summarizing the financial position and accounting policy of the enterprise.　　The law is usually done by a professional lawyer.　　Due diligence process usually takes a few weeks, of course, there are VC, they have a good understanding of the company's technology and market, and have a wealth of management experience, so that only a few days of careful on-site investigation can make whether the final investment decision. In the process of due diligence, VC will not only carefully visit the enterprise, talk to the middle and senior management of the enterprise, and send the enterprise a due diligence list ranging from pages to dozens of pages, requiring the company to provide historical changes to the enterprise, major contracts, financial reports, financial forecasts, breakdown of the financial data and customer lists, suppliers list , technical and product description and successful case analysis. VC may also consult your suppliers, customers, lawyers and loan banks, and even managers of past employers and colleagues. They would even investigate the person who provided the information to prove the credibility of the information provided. VC will ask a lot of questions, ask for a lot of historical data. This is not only the enterprise to prove their own opportunities, but also enterprises to find their own problems, improve the opportunities for themselves. In the face of nearly cumbersome questions and verification, entrepreneurs need to be calm and active cooperation.