Preparing Due Diligence for a Series A Financing as the Economy Reopens
While the primary strategy for startups remains survival during the coronavirus pandemic, startups can prepare for a Series A financing now to access the funds more quickly as the economy begins to reopen.
Startups have rightly focused on survival in these challenging times, particularly as liquidations of startups have picked up pace in Silicon Valley. Many useful articles have been published on survival strategies for startups during the coronavirus outbreak, often centered on making their services and products relevant to their customers, cutting expenses, and pursuing customer collections and revenue aggressively.
At the same time, the evidence suggests that startup funding has slowed during the coronavirus outbreak. While there is likely to be more success in raising funds with existing investor relationships, it is more difficult to establish new investor relationships at present, and then for these investors to be able to complete the required due diligence for a Series A during the pandemic.
Therefore, as the economy reopens, there should be pent-up demand from startups for Series A funds. Startups that have made it through the shutdown of the economy will need those funds as quickly as possible. To the extent that startups can allocate resources to prepare for the Series A now, they should be able to save valuable time on due diligence later and accordingly shorten the time to funding. For an example of YC’s Series A due diligence list, see here.
If you require any further information about Series A due diligence, please contact Edward Grenville, Managing Shareholder, Inspire Business Law Group, PC (firstname.lastname@example.org; +415 279 0779; www.inspirelawgroup.com).
This article is provided for educational and informational purposes only and is not intended to be, and should not be construed as, legal advice.