What is Due Diligence?

Due diligence is the comprehensive investigation of an investment opportunity before committing capital. It's the difference between informed investing and gambling.

Key areas of due diligence:

• Financial: Revenue, burn rate, margins, runway, projections
• Legal: Corporate structure, IP ownership, pending litigation
• Team: Founders' track record, key hires, equity distribution
• Market: TAM (total addressable market), competition, moat
• Product: Technology, traction, customer feedback
• Deal terms: Valuation, preferences, pro-rata rights

For crypto/presales: Add tokenomics review, smart contract audits, team doxxing, and community analysis.

Time investment: Institutional investors spend 100+ hours on due diligence. Retail investors should spend at minimum 10-20 hours per significant investment.

Due diligence for retail crypto investors: Start by verifying the team — are founders publicly identified (doxxed) with verifiable LinkedIn profiles and relevant experience? Next, review the tokenomics: examine the allocation breakdown, vesting schedules, and whether insiders hold a disproportionate share. Check whether the smart contracts have been audited by reputable firms such as CertiK, Hacken, or OpenZeppelin, and read the audit reports for critical findings. Evaluate the community by gauging organic activity on Discord, Telegram, and Twitter — bot-filled channels with no real discussion are a warning sign. Finally, look for a working product or at least a testnet demo, review the GitHub repository for consistent development activity, and assess whether the roadmap milestones are realistic and being met on schedule.