Mastering Startup Due Diligence: Lessons from Bay Angels’ Exclusive Session with Lonergan Partners (FREE Founder Checklist and Slides Included)
Bay Angels organized the first of many member educational events this past Thursday, June 20th, hosted at the Silicon Valley Capital Club, one of Bay Angels’ partners. Bay Angels was honored to have Kirsten Settle, Partner at Lonergan Partners, share about the art of analyzing the founders and teams of a potential startup investment. Lonergan Partners, located in Menlo Park, is one of Bay Angels’ newest partners, and their mission is to transform tech companies in the Silicon Valley by providing exceptional and unhindered executive search services. Kirsten has been with Lonergan Partners for over 5 years and is widely recognized as one of the most influential executive recruiters in Silicon Valley, specializing in retained searches for top-tier Finance, Go-To-Market, and Engineering talent as well as CEOs and Board of Director positions for both global public and venture-backed enterprise companies. The intimate group of Bay Angels members at the event ranged from investors who have been with Bay Angels for decades to members who have been angel investing for only a year. The evening started with introductions over drinks and hors d’oeuvres, and then Kirsten jumped right into her lively presentation, which at times took on the format of an interactive group discussion, with members jumping in on the conversation with their investment experiences and thoughts.
One of my biggest takeaways from Kirsten’s presentation was the reality that most angel investors don’t do enough due diligence on the leadership team of their potential startup investments. Three character traits that investors should look at when analyzing a founding team that were emphasized during the presentation were:
- Commitment — an “all in” mentality, the startup is not a side gig, it’s a full time responsibility
- Teachability — the founder has humility but also confidence in their product/service
- Conflict Facilitation — A CEO’s job is to create conflict and solve it, avoidance mentality is a red flag
It was also interesting to hear that in the past year, burnout has been a much greater issue to watch for than ever before, due to a greater societal emphasis on holistic life and family. Kirsten advised taking an additional step to look into the burnout level of the startup leadership team and find out how much they can handle. Although all of these aspects may be difficult to do due diligence on before the investment is made, being aware of what to look for in the leadership team of the startup can make all the difference. The Bay Angels attendees added that investors should continue looking for these traits and red flags even after the investment, so that they can immediately act upon any issues that arise.
Kirsten also introduced the “Core Four” leadership roles necessary to get a startup off the ground, from the perspective of an executive recruiter. They are, in order of hiring:
- CEO
- CTO/VP Engineering
- CFO
- GTM
Experienced investors should look at whether these roles are present, and if not, find out what the plan of the founder is to obtain these roles. They should also consider whether strengths of the people in these roles align with their positions. For example, the CEO should be strategic, personable, and well rounded in business, while the CFO should be very practical and have more extensive fundraising and compliance knowledge.
Kirsten shared all of this information and so much more in her presentation, and she even provided members with a checklist of 10 questions to ask when doing due diligence on a founder. Lonergan partners has graciously released this information for everyone to access. If you would like to see the slides and founder due diligence checklist from this exclusive Bay Angels event, they will be available at the end of this blog post.
Bay Angels is so grateful for our partnership with Lonergan Partners and the expertise that Kirsten and the team brings. Bay Angels also wants to thank the Silicon Valley Capital Club for their continued partnership and for providing a sparkling venue for this event. This educational event is only the first of many to come for Bay Angels members.
As a Bay Angels member, not only do you receive access to all of these educational events, you also get free entrance to all of Bay Angels’ monthly startup pitch events, discounts and perks through Bay Angels partners such as a reduced membership fee to the Silicon Valley Capital Club, and opportunities to network with some of the most experienced professionals in the Bay Area. Join Bay Angels today and become a part of a community dedicated to driving innovation in the Silicon Valley by emailing memberships@bayangels.com or visiting https://bayangels.com/members/.
To access your free founder checklist and slides from the event, please click here: https://drive.google.com/drive/folders/1rQ4UQO0jR3UMPFiPaKTTSWR2AlSY8zux?usp=sharing
About the Author: Allison Chow, Junior Member at Bay Angels
Allison has been a junior member at Bay Angels since 2023. She is excited about all things business and is currently working on obtaining her degree in Business Administration with an emphasis in finance.
