Lecture 6 - Foundations of Venture Capital:
Due Diligence

Lecture 6 is about what happens before a check is written: how to evaluate an opportunity rigorously, and how to tell a manageable risk from a dealbreaker. Good diligence is not a box-checking exercise; it is a structured search for the small number of facts that would change the decision. The most dangerous risks are rarely the obvious ones — they hide in how a company governs itself, what it discloses, and how it behaves when no one is watching.

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The session uses a staged funnel to organize the work, walks through the areas a venture investor must test — team, market, technology, clinical evidence, regulatory pathway, business model, and financing plan — and studies real cases where diligence failed or succeeded. It also extends the same discipline to evaluating a fund: the questions an investor should ask of a general partner before committing.

Learning Objectives

By the end of this session, a participant should be able to:

• Explain what venture diligence should and should not accomplish.

• Apply a staged framework to structure a diligence process.

• Evaluate the team, market, technology, evidence, regulatory pathway, model, and financing plan.

• Distinguish manageable risks from potential dealbreakers.

• Recognize the features of an un-investable cap table.

• Extend the same rigor to evaluating a fund and its manager.

Key Concepts Covered