Due diligence of a start-up for an investment fund

CIVITTA, a management advisory, was commissioned by an early stage fund investing in innovations in the energy sector to conduct a market and technical due diligence of an investment opportunity considered – i.e. an early stage enterprise offering an office waste sorting solution combined with a gamified environment for employees.

Due diligence of a start-up

A Polish seed fund that focuses on providing support to innovators working on energy-related solutions hired CIVITTA for a market and technical due diligence.

The objective of our consultants was to verify the innovator’s assumptions, such as:

  • users’ propensity to participate in the offered solution,
  • market size and the potential to grow,
  • financial assumptions and the subscription model.

On top of that, we have provided our client with the recommendations as to how to develop the enterprise as well as what to take into account considering this particular investment.

A structured due diligence project executed by an external consultant is usual practice and an integral part of investment consideration by professional investors. It provides reliable and impartial opinions, identifies risks and proposes solutions.

A thorough analysis of the business and technology

The due diligence analysis carried out by CIVITTA consultants was structured within two major areas: market and technology.

Key elements of market due diligence included:

  • the most important features of the product, its weaknesses and strengths,
  • size of the addressable market,
  • profile of the targeted client,
  • opportunities and threats,
  • competitive solutions,
  • strategy for entering the market,
  • risk identification and ways to address them.

Major elements of technology due diligence included:

  • feature with technology advantage,
  • feasibility and ready solution lead time,
  • areas of application.

The analysis was conducted by triangulation of information gathered from different sources, such as:

  • founder’s assumptions and calculations,
  • statistical data,
  • industry reports,
  • expert interviews executed by CIVITTA research team.

Key takeaways and red flags for the seed fund

As a result of the advisory project, our client has received all the data necessary to make a deliberate investment decision.

The final report delivered by CIVITTA consultants was a comprehensive analysis focused on major takeaways and recommendations regarding innovation development. The objective of this report was to be presented to the investment committee as an essential input during the investment decision process.