Due Diligence On Startups
This is a reproduction of Investing in Patents by Russ Krajec. For the complete book, get it on Amazon.
Part of due diligence is the process of turning over the rocks to see if something is hiding. As investors, we want to know if problems exist as early as possible. The other part is to test the validity of assumptions to see if they are true. This gives us confidence to make the investment.
Sometimes problems exist when the entrepreneur hides things, sugar-coats things, or is just plain ignorant about the right way to do something.
For due diligence on patents, there are three major considerations: does the company actually have access to the patents, do the patents have any problem areas, and what are the patents worth. This section follows up with a few best practices that need to be in place before making an investment.