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Have you miraculously been able to successfully pitch your one-in-a-million idea to an investor? Have you even gotten past the term sheet negotiation? Are you dreading the next step? If you are, then this is the right place to invest your time.

The next step is investor due diligence. It is the investigation of all aspects of your business by the prospective investor. It is meant to help the investor build faith in your business by laying to rest all queries and qualms. But, the thorough nature of this ‘cavity search’ is what sets most entrepreneurs’ nerves on edge.

As any seasoned entrepreneur will tell you, due diligence is a dreadful process. It is likely to be more difficult to survive than the previous step. It can very well be the deal-breaker and so demands the most caution out of the startup founders.

Therefore, it is very important that you buck up and prepare for it to the best of your abilities. Specially, with the help of your lawyer and your trusted team.

While some go all out in prepping for this final integrity check, others adopt a rather complacent approach. You need to strike a balance somewhere in between. Here are few tips that will help you ace that dreaded process:

• The meetings up to this point have been primarily off-site, formal, prepped and staged. The founders need to remember that due diligence would be a different experience and prepare accordingly. It will be more informal, personal and will incorporate a deep look into the team, vendors and even customers.
• Don’t let due diligence be a surprise to your team. Brief them beforehand of the intricacies of this process, their role and what is the code of conduct expected of them.
• Remember that your team has probably never been eye-to-eye with the investor so far. So, as the founder it would be your responsibility to prep them for what is to come. Since the process might involve in-person discussions with them, it would do your startup good if everyone is up to date on the plan and is on the same page.
• Make sure you do away with any conflict and personnel distractions that might be on-going within the team. It’s bad if the team members are not in harmony with each other. Further, it will also reflect poorly on your coordination skills as the founder.
• Do not keep the investor in the dark about any points of possible distress. Come clean about any failings or possible changes that might be underway. Do not hide distressing facts and hope that the investor doesn’t find out. Your truthfulness will reflect favorably on you and help build investor’s faith in you.
• Be available to answer any and every question the investor might have. Listen carefully and understand the wishes of the investor. Keep all documents organized and sorted and store them in a data-room for ease of access. Such quick response will ease the investor putting them in a good mood.
• It would also do you good to keep a lawyer on-board at the time as some legal issues or questions might come up. They can provide you with advice and guidance on how to go about the process and thus help you sail safely through what might seem like a dangerous event.
• Lastly, be patient and positive. Though a long and seemingly dreadful process, it is not an inquisition. It is just to satisfy the curiosity of the investor and put their doubts to rest. You will be surprised how a right attitude can make the due-diligence better and less frustrating.
• Thus, with a true heart, informed team, good intentions and full disclosure you can float through this seemingly dangerous process.

You can read more about due diligence process, what goes into it and how to survive it in this tell-all blog by entrepreneur.com.

Moreover, don’t hesitate to conduct some reverse due diligence of your own on the investors. It is very much within your right. Look into their background and make sure they meet your expectations. It will caution you of any shady activities of the investor and assure you that your startup is safely funded.

Legal advice in this matter just can’t be done without. Make sure you consult your startup lawyer for further information and guidance. This will save you from any faults that you might be inclined to make unknowingly, because when it comes to startups, a minor slip can lead to a death fall.