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Investor Background: Do the Research article

Due diligence is a two-way process. Just as investors look into the performance record of a company they are planning to invest in, and learn as much as possible about the team running the enterprise, the entrepreneur who is expecting an investment should also learn everything he or she can about the people planning to invest in the business.  

Both processes are equally important to the parties concerned, since one should be as sure as possible that the people one has business dealings with are what they claim to be. A lot of problems can arise with fraudulent investors, and these can be easily avoided by researching your prospective investors before you accept their money.  

There are many excellent firms who provide due diligence services, so you can ask for professional assistance in this regard. Any of these firms will check your investor’s background, and make sure that there is nothing negative in his or her past as far as investments are concerned. You will also be able to learn about your investor’s experience, positions held, reputation for integrity, general reputation and so on. 

Prospective directors of your company should also be thoroughly investigated before you invite them to help manage your venture. You need to ensure that your directors fulfil legal and statutory requirements, and that they are the right people for the job. This could be a challenging expensive process, but it is essential.


These pointers will help you find the directors you are looking for: 

Try to avoid inviting members of your family or friends to be directors – directors ideally should have no personal connections with those running the venture.  

Look for a director who has some knowledge and experience of the business you are in. This will make a lot of difference when it comes to what the director can contribute to the success of your venture. 

A ‘name’ director can be useful. Such a person, with recognised skills, experience and contacts, can cost a good deal, but would offer your venture a lot. 

The background of company board members is another important aspect an entrepreneur should look into. Business experience as well as personal characteristics should be considered in this area. Here are some of the things you should look for when you are looking into the background of potential board members for your company. 


Avoid people who seem: 


The following suggestions will help you assemble your board of directors: 


As an entrepreneur, you should take as much care choosing and recruiting your board of directors as you would in selecting a manager for your enterprise. An effective board of directors made up of the right people can help take your business forward by leaps and bounds, so make sure you make the right choice when you are hiring the members of your company’s board.