Ten questions we ask before committing capital to a private venture
The questions we put to every private venture before we commit capital, from market and management to downside, regulation and how we would be paid.
Due diligence is not a form. It is a habit of asking uncomfortable questions early, while the answers can still change the decision. These ten questions sit at the centre of how we assess a private venture. Financiers considering a venture alongside us can use the same list.
The ten questions
- What problem does the venture solve, and for whom? A venture needs customers who feel the problem enough to pay for a solution. We look for evidence of demand, not enthusiasm.
- Who else solves it, and why would customers switch? Competition includes doing nothing and doing it by hand. We want a clear, specific edge.
- Who runs it, and have they done this before? We assess the team's experience, how they handle setbacks and whether they welcome partners inside the business.
- How does it make money? We want the unit economics written down: what each sale costs to win and to serve, and what is left.
- What exactly will the capital fund? Capital should have a defined job and a way to tell whether it did it.
- What happens if the plan is wrong? We write the downside case before the upside case. If we cannot describe how a venture fails, we do not understand it yet.
- What approvals, licences and rules apply? Regulation can decide whether a venture may operate at all. We check early.
- What do we need to own, control or be told? Governance covers decision rights, reporting and what happens in a dispute.
- How does capital come back? We think about how and when investors might realise value, and whether that path is realistic.
- Who bears the risk, and does the structure match? We want the people who make decisions to share the consequences of them.
How we use the list
We do not score a venture against these questions and add up a number. We use them to find the weak point. Most ventures have one. The question is whether it can be fixed, priced or avoided.
We also separate what we know from what we have been told. A founder's projection is information. An independent source, a signed contract or a measured result is evidence. We label each.
What this means for financiers
If you are considering a project or equity financing opportunity, ask the same ten questions of us and of any venture we put in front of you. A venture that welcomes them is easier to trust.
A note on risk
Private investments are illiquid and can lose some or all of their value. This article describes our process. It is not investment advice and does not describe any offer.