Assessing an investment is all about doing the proper due diligence to be able to make an informed investment decision. Each investor must conduct their own independent review of the offering documents and perform their own independent due diligence.
Common factors that are reviewed by seasoned investors include:
- Management team backgrounds
- Differentiation and defensibility
- Business model
- Market
- Competitive landscape
- Historical financial performance
- Financial projections
- Unit economics
- Capitalization table
- Use of proceeds
- Legal
Usually investors are looking for an investment that represents an opportunity in an established or up and coming area with identifiable growth over a certain period of time, committed and skillful team, and momentum.
If you choose to take the process to the next step, you need to know how to read the terms under which a potential investment will be made.
Important Terms of Equity Investment include:
- Maximum and Minimum Amount of investment the company is looking to raise
- Valuation
- Type of security offered
- Voting rights
- Anti-dilutive provisions and registration rights
- Dividends
- Liquidation preference
- Conversion rights
- Other offerings
On the FundMe Portal, the deal terms that are presented on the offering pages are final terms and are not generally negotiated or changed once an offering has begun.