You’re talking about selling your company, rather than raising money for a startup.
At the stage where you’re selling a company, you’re expected to have sales, metrics, and various track records that can be verified, hence the intensive due diligence. And usually the acquiring company has in-house expertise on the domain, and is capable of doing the due diligence.
Early stage startups have none of that, just an idea, things the team have done before as proof they can execute, and sometimes some social proof like TED talks or high-profile board members.
The challenge of doing due diligence then is that most general VCs that invest across a broad range of domains lack the in-house expertise to fully vet all of them. They can hire SME advisors, or ask around in their network, and should. But it’s possible for things to slip through the cracks sometimes.
At the stage where you’re selling a company, you’re expected to have sales, metrics, and various track records that can be verified, hence the intensive due diligence. And usually the acquiring company has in-house expertise on the domain, and is capable of doing the due diligence.
Early stage startups have none of that, just an idea, things the team have done before as proof they can execute, and sometimes some social proof like TED talks or high-profile board members.
The challenge of doing due diligence then is that most general VCs that invest across a broad range of domains lack the in-house expertise to fully vet all of them. They can hire SME advisors, or ask around in their network, and should. But it’s possible for things to slip through the cracks sometimes.