After a start-up initiates financing, in order to better cooperate with the due diligence of investment institutions and improve the efficiency of capital docking, it will generally make preliminary regulations on matters such as strategic development, capital planning, equity structure, internal governance, and financial compliance.

After the due diligence begins, the investment institution will organize a due diligence team to settle in the enterprise and conduct a comprehensive and systematic investigation of the company's finance, legal affairs, business, founders, partners, etc.

In general, the investigation of the business, team, founders and partners of the financing company is mainly carried out by the leader of the due diligence team, and the investigation of other matters can be outsourced to a third-party institution.

If the overall strength of the investment institution is relatively strong, a due diligence team will be formed to handle all investigation matters.

Through due diligence, investment institutions can have a comprehensive understanding of the financing company and discover the advantages and disadvantages of the financing company.

At the same time, through negotiation with due diligence personnel, financing enterprises will also understand the due diligence methods, communication forms, and recognition of the investment institutions.

Therefore, financing companies should seize this opportunity to systematically understand the styles and preferences of investment institutions that may establish partnerships in the future.

Of course, financing companies can also take this opportunity to have an in-depth understanding of the projects that have been completed by investment institutions.

If it is said that the financing company and the investment company are still in a state of polite greetings at the stage of obtaining the investment letter of intent, then after entering the due diligence stage, the financing company and the investment company can be classified into the same camp, and they should enhance their understanding of each other and discover various problems in a timely manner.

If in the due diligence stage, the investment institution has a strong willingness to invest, or there are external competitors, it will generally adopt the method of negotiation while carrying out due diligence to discover the problems of the financing enterprise and gradually dismantle the high valuation of the financing enterprise.

With the completion of the due diligence, the key terms of the investment agreement are also largely finalized. However, some investment institutions will negotiate an investment agreement after the due diligence has been completed.

Due diligence is related to whether the company can successfully obtain investment, whether the company's valuation is accurate, and whether the project is running smoothly, so enterprises must ensure that all the information they provide is accurate and reliable.

At the same time, corporate due diligence involves a lot of content, which is the highest level of investigation of the enterprise, and requires participants to fulfill their confidentiality obligations.

Let's first analyze the content of due diligence on the basic situation of the enterprise, as shown in Table 2-6.