Monel AminProfileFounder of DiligenceVault. Former head of liquid investments risk @ Citi, CMU/Tepper and BVM Engineering alumna
The Investment Case for a DDP
A common conversation when making an investment case - is it a worthwhile investment? In the case of a digital diligence platform (DDP) like DiligenceVault - is it worth investing in digital and automation buzz? Can I not just hire interns and analysts to do the manual work? Well, you can, but would that be the best use of your talent? And is that approach a reflection of what you want your future to look like?
If you are debating going digital with your diligence processes, and are intrigued by DDPs offering, what may give you pause is the business and career risk involved in any technology decision making. Will a DDP provide the value, and mitigate risk factors to ensure success?
Here's a due diligence checklist from yours truly :).
A Digital Brain: A DDP should become your central nervous system for all diligence needs. You should never have to worry about document collection, version tracking, copy and paste efforts from those files, or unwieldy email chains.
Increase in Productive Capacity: In addition to digitally available data, the benefit of instant transparency throughout the process, as well as automation of your workflows will eliminate error, ensure visibility, and save your team precious time.
Client Success Promise: It is essential to ensure that the DDP has a well-trained and responsive client success team with global-coverage, given investment partners are global.
Product Focus: Product-minded DDP continuously invests in product research and development. Key indicators of style drift - Is the DDP functionality the dominant revenue driver for the provider? Is the product development outsourced or is there a dedicated technology team?
Experienced and Diverse: Does the DDP have an experienced and diverse team that knows how to build, support and scale technology, while also having lived through the problems that you are trying to solve?
Industry DDQs: Does the DDP offer access to the leading digitized industry questionnaires? This would serve as a starting point for aligning yourselves with industry best practices.
Built to Last: You want a partner that is financially sound and has a self sustainable business model, and the price you pay is also for the stability you desire.
Positive NPV: Diligence is a two-sided process, and a good DDP should recognize that. A DDP should be designed and built for continuous diligence needs and repeat use, as a result, ROI for the users on the platform exponentially increases with time.
The Ecosystem: Investing in DDP is more than purchasing a diligence software - you’re investing in an ecosystem. By adopting a platform that even your investment partners value, you collectively take the cost out of the system, and dramatically cut down on due diligence and monitoring time.
The Intangibles: As more users adopt a DDP, the platform becomes finetuned for nuances that may not be evident until you experience a lack of one. On a widely adopted DDP, you benefit from industry best practices and you get to learn for “free”. No amount of money can buy this experience.
The Diligence Debt
Reflecting on the investment case, while the status quo may appear to be a lower risk option, is it worth being left behind when the industry is marching forward? The longer you wait, going digital will become more expensive. Simply because you will have accumulated more and more unstructured data with documents from diligence processes spread out over shared drives, email chains, and PDFs. That is what we call the diligence debt! So ultimately, when, and not if you transition to digital, it will be that much more expensive. While I am most certainly biased in saying this, we have seen it too many times now.
So, are you ready to get your digital diligence efforts going and in the right direction? Then, come talk to DiligenceVault :).
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