April 2017

Par Equity’s Andrew Castell looks at how and why the firm mobilises business angels to help assess potential investments.

It’s a puzzle.  Venture capitalists get very excited by innovation and disruption when it comes to companies we invest in, but there isn’t much innovation of our own business models.

Due diligence, the work we do to assess a prospective investment, is of critical importance to investors.  It has a direct bearing on the ultimate success or failure of an investment – unless, of course, you count “spray and pray” as an investment strategy.

A difficult question, particularly where amounts invested are relatively small or innovative technologies are involved, is how to conduct due diligence without loading up the prospective investee company, or the investors, or both, with costs out of all proportion to the amount being invested.

At Par Equity, our innovative step was to come up with a model that sees us crowd-source business skills from within our investor base.  The result is cost-effective assessment of the commercial aspects of potential investee companies by well-qualified individuals.