What information and documentation were you required to provide during the due diligence process?
Alexander Busse: During the process, we had to provide detailed information about our business model, including how Cybervize has evolved since its beginning, milestones achieved, and the current state of our products or services. It was also necessary to provide information about the founders and key employees, their roles in Cybervize, the relationships between them, and any previous startup experience. In addition, we needed to present the expertise generated at Cybervize, current funding needs, existing and upcoming funding rounds, and details about our existing and potential investors. We were also asked about potential risks and unlikely but serious events that could affect Cybervize.
In addition, we were asked to provide a clear vision for Cybervize, relevant company brochures, and press articles from the past three years. Descriptions of our products, services, and business model, as well as their strengths, weaknesses, opportunities, and threats were also requested. Finally, details of our pricing model and information about our existing customers and their feedback were also of interest.
These requirements provided a comprehensive view of our business, strategy, and position in the market.
"Some of the questions were very detailed, which led us to integrate new considerations, such as a price/volume framework, that we had not previously created for our planning."
Were there any particular challenges or surprises in obtaining these documents?
Alexander Busse: In the early stages of due diligence, the focus was not so much on providing specific documents as evidence, but rather on providing information in response to the questions posed. Fortunately, we had already gathered much of the information we needed for our pitch. We were able to answer most of the questions directly in the body of our pitch. However, some of the more specific questions, particularly regarding our business plan, required a separate presentation. In this context, tables and graphs were much more informative than just text. Some of the questions were very detailed, requiring us to include new considerations, such as a price/volume parameters, that we had not previously included in our planning. We also graphically prepared the founders' biographies to provide a better overview and clarity. One of the more time-consuming tasks was researching more specific questions, such as identifying our top 10 competitors. However, we had already done this research and just needed to update it. Overall, it was an intensive but valuable process.
What key areas or risks were highlighted during the due diligence?
Alexander Busse: These were the highlighted areas from the due diligence:
- Company and Product Development: Questions about the company's development since the beginning, milestones achieved and the current development status of the products or services are important. This gives investors insight into the company's progress and potential.
- Team and founders: Questions about the founders and key employees, their relationship to each other, their past experience and their commitment to the company are essential. A strong and committed team is often a critical factor in a startup's success.
- Finances: Questions about current funding needs, use of funds, company valuation and existing funding commitments shed light on the company's financial health and plans.
- Risk Management: Identifying the biggest threats to investors and strategies to mitigate risk are important for investors to understand the potential risks and opportunities of the investment.
- Vision and business model: The company's vision and business model are critical to understanding the company's long-term goals and strategic direction.
- Products and services: Questions about products, offerings or services, their USP and pricing model provide an overview of Cybervize's core business and how it differentiates itself from the competition.
"Another key benefit was that many of the relevant issues arose in our early work with CISPA. As a result, we were already well prepared to meet these challenges."
How did you overcome those challenges?
Alexander Busse: I already had experience with due diligence in my professional life, which proved to be very valuable. Another key advantage was that many of the relevant issues had already come up in our early work with CISPA. As a result, we were already well prepared for these challenges. Within our founding team, we divided the tasks according to our strengths and expertise. After each of us completed our part, we reviewed and discussed the results with each other. This collaborative approach proved to be very effective and helped us meet the challenges successfully.
What advice or tips would you give to other startups preparing for due diligence?
Alexander Busse: A key element in preparing for due diligence is clarity about your vision and product. This is the basis for everything else. It is also very important to have a well thought out business plan. This should not only be prepared internally, but also reviewed with external experts or consultants to identify and address potential weaknesses. It is also important to be realistic about your own risks. This means honestly assessing not only the opportunities, but also the challenges and potential pitfalls. Finally, you should know the market well, especially your competitors. A deep understanding of the market environment and the positioning of your startup in it is crucial for a successful due diligence.
