Management Team Due Diligence: Measuring the Intangibles

Evolve White Paper by Jeremy Spaulding
August 29, 2023

Abstract: The founders of a company—the team—can make or break the company.  There are many reasons companies fail.  Big reasons for company failure include running out money and products or solutions with no product-market fit.  Research shows that human issues are the cause of failure nearly 50% of the time.  As a startup grows, it becomes necessary for the leadership to mature as well.  Understanding of the management team is both science and art.  Even though a founder may have impressive technical skills or an equally impressive background, they may not be successful in running a company.  The real questions clouding the minds of investors are often the toughest to answer.  Effective management team due diligence is a multiphasic process that includes surfacing the intangibles, assessing strengths and weaknesses, fit for role and much more.  If done correctly, this process can also provide both founders and investors with valuable insights on the team, an individual analysis of each leader, and identification of improvement areas.   Effective management team due diligence gives investors a deeper and wider pool of information on which to base investment decisions and add value to the startup in the future following an investment.