Updated: Nov 2
At Fundr, we’re committed to making the startup investment process seamless for both founders and investors. One pain point we identified early in the development of the Fundr platform is the investment due diligence process. For many founders and investors, conducting startup evaluation can be difficult and long. Founders often don’t know what investors are looking for, and investors are responsible for understanding all the key details of every business they consider for investment. At Fundr, we want to provide transparency and autonomy for founders and investors alike, so we can match startups and investors on the business pillars they care about most.
To do this, Fundr offers a complete startup evaluation process on its platform. By using investor feedback and our own experience as startup founders, we created an application that covers all the same questions that investors have - with quantitative data. In about 20 minutes, startups can input all the critical information about their business. Here is a guide to how the application works, what you should put where, and how it all affects your approval and raise.
There are five major sections to our startup application::
Profile: Our self-serve platform allows every startup founder to create a personal profile with important information for background checks and connection to the company’s financial institution.
Company Profile: The company profile includes important basic information about the startup. The information in this profile is the baseline of the automated one-pager that we put together for investors. It’s important to note that everything you add here should be investor-facing, and can include attachments like one-pagers for investors to review.
Evaluation: In this part of the process, we take the guesswork out of startup evaluation. We’ll provide a quantitative assessment of the startup across five dimensions:
Team: Investors want to know how the startup’s team works together. In this section, every startup has a chance to share about the team structure and how it helps the business succeed.
Traction: Founders of startups are always making moves, and this section gives them a chance to share how the business is growing, achievements, and what’s coming next.
Raise: In this section, founders provide an overview of their fundraising. We ask about the startup’s past raises, cap table, and terms.
Founder Background: Here is where we find out why a startup founder created their business, and quantify their experience for the work their startup does. This section also includes optional demographic information that we use to offset bias in the investment process.
Personality: We go beyond just product-market fit all the way to investor-founder fit. Using the Big Five Ocean personality traits, we help investors understand how founders think and work.
Data Rooms: A data room is the one centralized place where founders can provide all their documents needed for due diligence. This often includes legal incorporation documentation, historic and current financial statements, contracts, pitch decks, and more. Investors can access all the information about a company in one place for ease of review.
Raise: This is the place for startup founders to put in all the information about their current raise so we can optimize matchmaking with investors. Founders can share information about their minimum and maximum raise parameters for individual investors as well as for Special Purpose Vehicles (SPVs), term sheets, any outside investor interest or commitment, and any investor leads. Fundr provides term sheet templates for startups to use or you are able to bring your own.
Startups are complex and ever-changing so there’s no one parameter of your business that influences your Fundr score. A few more things to keep in mind:
The more complete the assessment is, the more information we have to match startups with investors. Don’t worry if you don’t have traction or co-founders. We encourage founders to fill out as much information as they can so we can get a holistic view of your company and its potential.
Fundr’s platform automatically creates a one-page overview of the startup using the photos and descriptions that founders add into the assessment, saving founders a step in the process. Founders should be sure to choose photos and descriptions that are the most impactful.
For increased transparency, we ensure that investors can see everything our founders add to the data room. Founders should be ready to answer questions about anything they provide in the data room and we suggest to leave out anything proprietary that requires a non-disclosure agreement (NDA).
Fundr offers SPVs for those startups looking to take on multiple, smaller investments. SPVs allow startups to consolidate those multiple investments into one line item on the cap table. Consider SPVs if you’d like to create an opportunity to bring in additional funding from angels, but want better cap table management.
The Fundr team reviews every assessment and connects with founders within a week to clarify information or ask for additional details. Then, startups are approved to start raising on the platform.
The due diligence process presents an enormous opportunity for founders to highlight the strengths and opportunities of their business. We hope to give founders and investors the best process and platform to clearly find, review, and invest in world-changing businesses. Join us today to be part of the startup investment revolution.