Fact: A study found that angels who spent more than 20 hours on due diligence experienced 5 times higher returns than those who spent less time. Equally important, they also reduced their losses by about one-third.
Most angels understand why due diligence is important. Beyond potentially improving your returns, as your angel deal flow increases, due diligence helps you screen deals to help determine the deals and companies you’re most comfortable with. It also reduces risks by shining a light on potential weaknesses and future problems, which helps angels prepare for the issues and help the company as it grows.
