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Why Diligence Matters

A thorough diligence process is the linchpin of any successful venture fund. Without one, venture investors would be grasping at straws, shooting in the dark, and tossing dice.

In fact, a Ewing Marion Kauffman Foundation (EMKF) study found that time spent on due diligence is significantly related to investment outcomes. According to the EMKF, investors who spend more than the median of 20 hours on due diligence get better results than those who spend less than 20 hours. Furthermore, angel investors in the top quartile, who spend more than 40 hours conducting due diligence, perform even better, reporting investment returns north of 7x.

Although these results seem intuitive, the practical reality is that few people have the time to devote to extensive due diligence when selecting venture investments.

At iSelect, we make the time for this critical investment step, and we don’t stop at 40 hours. In total, iSelect’s Venture Team spends about 120 hours conducting due diligence on each of our portfolio companies, a process that less than 5% of applicants even make it through. Careful, expert diligence is, hands down, a key determining factor in successful venture investing, and iSelect is among the strongest in the industry.

If you are interested in the wealth-generating and innovation-creating aspects of venture investing but don’t have the time or expertise to conduct the appropriate amount of due diligence.

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