VCs are getting tough on due diligence in the new work-from-home era - Business Insider

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Exclusive: VCs are toughening up their due diligence because they can't meet startup founders in person, as the pandemic imposes a work-from-home era

Much like the rest of the global workforce, venture capitalists have gradually adjusted to the new work-from-home era. But some VCs say that video-conferencing tools like Zoom aren't enough to compensate for face-to-face meetings with founders, so they are making up for it by tightening their due diligence reviews of potential investments.

It also means that each startup's financial plans will be scrutinized more closely during fundraising, one VC said. Founders should be prepared to walk VCs through their startup's burn rate and cash runway, while explaining how the coronavirus pandemic has affected sales, the VC added. Startups should be equally hesitant to raise funds under the current conditions, VCs advised. While at least five VCs suggested that startups hold off fundraising entirely, three suggested that startup founders tap into their pool of existing investors if they absolutely needed to raise money.

 

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