Due Diligence
Also known as: Investor Due Diligence, DD
The investigation and verification process conducted by investors before completing an investment.
Full Definition
Due diligence in healthcare investment covers technology (IP, development status, technical risk), clinical (evidence quality, regulatory pathway, reimbursement strategy), commercial (market size, competitive landscape, early customer relationships), financial (financial statements, cap table, existing obligations), and legal (IP ownership, contracts, litigation) domains. The depth of due diligence increases with investment size. Series A due diligence typically takes 4–8 weeks.
Example
A Series A investor conducts due diligence including a technical review of the algorithm by an independent expert, conversations with three reference customers, a regulatory pathway assessment by an FDA consultant, and a cap table review by their legal counsel.