DUE DILIGENCE: THE OBU WAY
There’s a lot of uncertainty around due diligence – what it is, how it works, why organisations like Obu do it, and why anyone who’s investing needs to do it too. So on this page, we’re explaining the process, what it means for you, and how we do it at Obu.
What exactly is due diligence?
Due diligence (or DD) is the process an investor goes through when they’re deciding whether to invest in a business. There’s no ‘right’ way to do it – every investor will have their own approach, reflecting their motivations for investing, their risk tolerance and the types of return they’re looking for. All of those things will shape the questions they ask and the research they do as part of their personal decision-making (or due diligence) process.
For some investors, it’s a relatively quick step, while others prefer to take a more in-depth look at the businesses they’re considering. Some might talk it through with a financial advisor, while others will make the decision alone. Their approach to due diligence might even change for each business they talk to. And that’s ok too.
So what about you? Well, whether you’re investing for the first time or the fiftieth, your approach to due diligence will be unique to you and will keep on evolving. However you do it, the most important thing is that you recognise it as an important step in your investing journey, give it the attention it deserves, and do what feels right for you.
How we do it at Obu.
Here at Obu, we do our own rigorous round of due diligence on every business that wants to raise investment with our support. We’re proud to have designed a unique, progressive due diligence process which actively removes the bias that too often works against women seeking investment.
It’s a careful, detailed process we go through with each founder to make sure their business meets our standards and lines up with our values – and not everyone does. We’ll only ever support raises on Obu once they successfully pass our DD process.
What that means for you.
The due diligence we do here at Obu shouldn’t be seen as a replacement for your own. Only you know your personal financial circumstances and your motivations for investing. That’s why carrying out your own research is really important too.
When you find a raise you’re interested in, make sure you review the company’s pitch deck, term sheet and any other supporting information they provide. We’d also encourage you to arrange a conversation with the founders, so you can see if you’re the right fit for each other and ask as many questions as you need, before you make your investment decision.
Breaking down bias.
We believe due diligence should be a fair process that genuinely sees and understands founders and their businesses. But in the past, that just hasn’t been the case. In fact, bias (however unconscious it might be) has seen women and diverse founders unfairly sidelined, seen as less reliable, and denied opportunities to scale their businesses.
That’s why at Obu, we’ve analysed every question we ask to make sure we’ve removed bias. It’s a process we’re constantly reviewing and refining in partnership with industry experts, making sure our decisions remain fair, balanced and bias-free.
The key areas we cover.
We take a really detailed, up-close look at every business who wants to raise investment with Obu’s support, making sure we treat people fairly, assess claims rigorously, and feel confident each business lines up with our standards, values and goals.
While this isn’t everything we cover, we’ve shared some of the key areas we do explore below. If you’re considering investing, you might like to use them as starting points for your own due diligence, alongside getting clear on your own financial circumstances and motivations for investing. And if you’re a founder raising investment, you might like to think about how you could talk about, and evidence, the work you’ve done in these areas.
The Team.
We talk to founders in depth, getting to know them and their businesses and asking them to evidence the skills, experience and processes they’ve built up so far. That includes:
Management performance
Industry experience
Strategic decision making
Team balance
Recruitment policies
The Deal.
We take a deep dive into the investment deal the founders are offering, looking at how fair, reasonable and realistic it is for everyone involved. That includes:
Business valuation
Exit opportunities
Risk-return profile
Cap table quality
The Product.
We ask founders to explain, and evidence, the strength of their product or service – its potential market, competition and challenges. That includes:
Market size and growth
Business model
Go-to-market strategy
Product development stage
Barriers to entry
The Financials.
We take a close look at the current and future financial picture for each business, asking founders to walk us through their predictions and provide evidence. That includes:
Financial model
Revenue generation
Growth forecasts
Runway
Obu does not provide investment advice and/or recommendations, and no communication through its website should be considered a recommendation to invest. Obu endeavours to ensure that information on investment opportunities is correct. However, Obu cannot guarantee its accuracy and does not accept liability for errors or missing information. Investors are entirely responsible for evaluating investment opportunities, including the information available on Obu that is stated as factual. Obu strongly recommends that you consult with a financial advisor before making any investment decisions.
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