How do investors do due diligence on independent sponsors & searchers prior to investing?

October 05, 2021
by an investor from Harvard University in Denver, CO, USA
I saw someone pose this question on Twitter today and I thought it would make for an interesting discussion here on Searchfunder.
Investors: Assuming you find the deal attractive, how do you do due diligence on new searchers or sponsors? Reference checks / background checks / etc?
Searchers and sponsors: What experiences have you had with prosepective investors doing DD on you (rather than on your deal) that made you more or less interested to work with them?
from Michigan State University in Chicago, IL, USA
I see so many people coming out of banking/consulting/PE/straight from MBA who haven't had to cover a blue collar shift when someone calls out. (And list here the other 10,000 things that go wrong in small business ownership.) At some point, it's going to be human nature that when someone is literally cleaning toilets, under water on their SBA loan, making $100,000 (assuming they can still pay themselves a salary) that they consider going back to life in a downtown skyscraper flying first class to client meetings and making $600k.
When that moment comes, convince me you still want to shovel the shit :)
PS. This is one reason ex-military over-represent in search -- they know how to do very very hard work in bad conditions for little money and not quit. (
from Northwestern University in Boulder, CO, USA