3.0 Issuers -Due Diligence

3.0 Issuer Due Diligence

3.1 Review of Completeness and Accuracy

The following documentation, uploaded in the dataroom,  will be reviewed for completeness and accuracy :

  • Pitch deck 

  • Description of Market Opportunity

    • Market Definition​

    • Geographical Scope

    • Demographical scope

    • Growth of Market Segment

  • Description of Product/Offerings

    • Types of Products​​ 
    • Value proposal
    • Professional Services
    • Managed Services
  • Pricing Model​

    • Pricing Strategy

    • Recurring/Non-Recurring

  • Competition

    • Number of Competitors​

    • Type of Competitive Offerings

    • Competitive Benchmarking

  • Suppliers 

    • Names of Suppliers​

    • Description of Services/Products

    • Contracts

  • Customers

    • Customers to date​

    • Satisfaction Measures

    • Adoption rate

    • Retention rate

    • Customer Contracts, T&Cs

  • Detailed Financials

    • Profit & Loss​

    • Balance Sheet

  • Fund Raising

    • Capital Needs

    • Previous Financing Rounds

  • Cap table

  • IP, Patents, other assets

    • Trademarks​

    • Servicemarks

    • Patents

    • IP

  • Company Legal Structure

    • Incorporation​

    • Ownership Structures

  • Company Timeline

    • Inception​

    • Key events

    • Plans

  • Organization

    • Leadership Team Bios​

    • Organizational Structure

    • Staffing Plans

3.2 Review of Strategy and Business Model

Based upon the documentation in the Dataroom, the USA Funders will undertake a review of the underlying strategy and business model of the issuer.

a. Product/Offering Review 

Product / Service – The companies must describe how their product/service will 

deliver value to the customer and can not be easily replicated by the competition. A
a platform that can be easily modified to meet changing market needs and stay ahead
of the competition is important. In addition, scalability becomes important to the
financial success of the venture.

b. Market & Customers

The business proposal must show how it will serve a large, rapid growth
market. The entrepreneurs must be able to clearly identify their target customers
and define strategically how they will reach them. In addition, it is essential that the
competitive landscape is mapped out and action plans developed to minimize
competitive threats.

• Who are the users of the product and how many of them are there?
• What are the drivers that are fueling the growth?
• How is the company positioned against competitive threats?
• Describe the competition.
• Is the customer, the supplier, and /or the competition fragmented?
• Are there attractive substitutes?
• What regulations govern this market space?
• What are the barriers to entry?
• What is the distribution channel and who controls it?
• What are the market boundaries? 

c. Suppliers and Assets
• What customer problem is being solved?
• What unique technology and/or knowledge does the company have?
• How does this technology and/or knowledge create value for the customer?
• Why is this product or service superior to the competition?
• Are there any strategic relationships?
• Does this product exhibit scalability?
• What are the barriers to enter? IP protection? 

d. Business Model Review

• How will the company sell its product or services?
• How will the customer perceive value?
• Are there comparable companies to benchmark?
• Who are the key market influencers that the company needs to target?
• What are the financial requirements, ie capital investment, cash, etc.?
• Is the business model scalable?
• What is the potential for recurring revenue?
• What are the anticipated margins?
• What is the exit strategy? Is it feasible? 

e. Founders and what are their backgrounds
• Do they have relevant experience?
• How well do the individuals function as a team?
• Do they have a track record of success?
• What critical resources do they have access to?
• How well do they evaluate risk?
• Are they detail-oriented?
• Do they exhibit a capacity for a sustained effort? 

f. Financials and Valuation/the need for 409A

  • Has an external appraiser performed a valuation

Determine need for external 409A via Morgan Stanley


g. Escrow Target and Planned Use of Funds

The escrow target is the amount of capital a startup will need to raise in order for the round to be deemed successful and for a company to be able to close on funds committed by USA Funders investors.

  • Borrowings – Documents and agreements evidencing borrowings, whether secured or unsecured, or other indebtedness (long-term or short-term), including indentures, credit or loan agreements, debentures, commitment letters, letters of credit, etc., relating to any outstanding or available long-term or short-term debt, including amendments thereto and any related instruments granting security interests.

  • Debt Schedule – Debt schedule identifying all short-term and long-term debt and capital lease obligations with principal amounts, interest rates, balances outstanding and maturity dates.

  • Financing Arrangements – Documents and agreements evidencing other material financing arrangements, installment purchases, etc.

  • Investor Financing – All documents relating to financings with investors, including any accredited investor questionnaires, if applicable.

  • Financing Statements – List and copies of all financing statements currently in effect.

  • Detailed historical monthly balance sheets, income statements and cash flows for the last 3 years and the current YTD period (Please confirm that interim financial statements are prepared on the same basis as that used for the most recent audited statement. If not, what are the adjustments recorded or accounts reconciled only at year-end?).

  • Audited financial statements (if available) and management letters issued by auditors in respect of the audits.

  • Copy of the most recent business plan and/or budget 

  • Analysis of operating and general and administration expenses (and as a percentage of revenues) by significant category for the last three years and the current YTD period.

  • Monthly financial reporting packages distributed to senior management

  • Liens and Encumbrances – Schedule of liens and encumbrances against any of the Company’s assets or stock (whether or not of public record).

  • Sureties – Documents and agreements evidencing surety and other bond arrangements.

  • Company Loans – List and documentation of all loans made by the Company, including loans to officers, directors, and employees.

  • Correspondence with Lenders – Correspondence with the Company’s lenders regarding any default or alleged default.

3.3 Expanded Financial Review

At the discretion of the USA Funders CFO, an expanded Financial Review may be requested. An extended review may be required for larger or more complex issuers, and include some or all of the following areas:

  • Orders, sales (in both $ & units) and gross margin by major product group, customer type and by geographic region for the last three years and the current YTD period.

  • Description of non-recurring revenue (including large one-time orders), non-product revenue (royalty, licensing, trademark or patent revenues), and unusual and extraordinary items for the last three years and the current YTD period.

  • Schedule showing firm order backlog, by product line as of the most current date and as of the comparable date in the preceding year (include estimated gross margin and expected sales timing of orders in backlog).

  • Top 10 customers ranked by sales for each of the last three years and the current YTD period.

  • Listing of significant new customers and lost customers in the last three years.

  • Balance Sheet

  • For the last three years and the current YTD period, provide the following:

  • Cash

  • Bank reconciliations including bank statements for the current YTD period and previous three year-end periods.

  • Provide a listing of any restrictions on cash.

  • Accounts receivable

  • Accounts receivable aging analysis and trends for the last three years and the most recent available month.

  • History of allowance for doubtful accounts balance, bad debt expense, and write-offs, and reserves for sales returns, discounts, rebates, refunds, and credit memos in the last three years and the currently available month.

  • Inventory

  • Inventory balances by location, major product group, and type (raw materials, work in process, finished goods).

  • Summary of inventory write-offs and basis used to develop obsolete and slow-moving inventory reserves, including any history of sales and write-offs of obsolete/overstock inventory.

  • Manufacturing and Purchasing

  • Summary of locations and descriptions of subcontracted manufacturing facilities.

  • List of top 10 significant suppliers by purchasing $ and detail of purchased supplies from each.

  • List of any production/sales made under license or royalty agreements.

  • Prepaid Expenses and Other Assets

  • Schedule of prepaid expenses and other long and short-term assets (including goodwill and intangibles and amortization criteria) including assessment of potential recovery.

  • Property & Equipment

  • Schedule of fixed assets including date acquired, original cost, accumulated depreciation, net book value, and recent appraised value.

  • List of capital expenditures (historical, current, planned for the next 3 years) separated by major category (e.g. machinery, MIS, buildings etc.)

  • Accounts Payable and Accrued Liabilities

  • Accounts payable aging schedule and significant accrued expense account for the last three years and the most recent available month.

  • Details of customer deposits and any deferred revenues by type and customer for the last three years and the current YTD period.

  • Warranty expense and sales returns history (expense and reserves) for the last three years and a description of how the warranty and sales returns reserves were developed.

  • Contingencies and Litigation

  • Summary of pending, threatened or asserted litigation claims and any legal accruals including contingent liabilities, product liability claims and outstanding supplier claims.

  • Agreements

  • Joint venture, partnership or trust agreements with respect to which the Company is a party.

  • Sales & Outbound Marketing

  • Sales

  • Detailed sales organizational views by resources, territories and accounts.

  • Orders and sales by customer in each of last 3 years.

  • Orders and sales by product in each of last 3 years.

  • Orders and sales by geographical region in each of last 3 years.

  • Orders and sales by vertical industry segment in each of last 3 years.

  • Orders and sales in each of last 3 years by incumbent customers versus new customers.

  • Orders and sales in each of last 3 years for existing products versus new products.

  • Top 20 customers (by sales $) in each of the past 3 years, indicating per year sales and what products and services composed the $ amount.

  • Most current sales operations report, inclusive of activities, forecasts and performance metrics.

  • Most current sales funnel and composition, today and 1 year ago by product, region and industry segment.

  • Past 12 month won/loss analysis by region, product and customer.

  • Discounting trend over past 3 years.

  • Currently pending POs.

  • Currently open bids.

  • Top 10 forecasted opportunities for next 12 months.

  • Detailed explanation of sales compensation plan.


















































Funders USA, inc. A Delaware Corporation

2901 W Coast Highway ste 200, Newport Beach, CA 92663


Headquarters Newport Beach


The information provided on this website pertaining to Funders USA Inc., a Delaware Corporation, "Company", its business assets, strategy, and operations is for general informational purposes only and is not a formal offer to sell or a solicitation of an offer to buy any securities, options, futures, or other derivatives related to securities in any jurisdiction and its content is not prescribed by securities laws. Information contained in this email should not be relied upon as advice to buy or sell or hold such securities or as an offer to sell such securities. 

The Company is registered with the SEC and approved by FINRA to act as Funding Portal across all states in the US. Regulation Crowdfunding offerings (CF) are presented by Funders USA, inc. Regulation A and D offerings on this website are independently presented by Jumpstart Securities,llc.

The Company does not take into account nor does it provide any tax, legal or investment advice or opinion regarding the specific investment objectives or financial situation of any person. While the information on this website is believed to be accurate and reliable, Company and its agents, advisors, directors, officers, employees and shareholders make no guarantee or warranties, expressed or implied, as to the accuracy of such information and Company expressly disclaims any and all liability that may be based on such information or errors or omissions thereof. Company reserves the right to amend or replace the information contained herein, in part or entirely, at any time, and undertakes no obligation to provide the recipient with access to the amended information or to notify the recipient thereof.

©2020 by USA Funders, a Delaware Corporation.