This content has been marked as final. Show 6 replies
Due diligence fees are common. References is another story, most of the time Non Disclosure agreements prohibit discussing the business transacction and the parties involved for a specific period of time.
Be careful!! Please do search on this forum for "Freeman" I believe it is. Some members have lost money paying a fee like this and your example sounds just like theirs.
I suggest you contact SCORE and your local bank before you pay this, both will provide you with some valuable information. Do some homework and protect yourself. There are too many scammers out here praying on those who need help the most.
They should be able to provide references. They don't have to give the details of the deal but they should be able to tell you who they worked with.
You're welcome. Good luck.
I meant "preying" not "praying," that's what happens when you don't proof enough.
I have said many, many times - never pay anything up front without a guarantee of a return of your money if you don't get funded. True investors understand that part of the process is their diligence expenses and should incorporate that into their expected returns.
Business Money Today
Due diligence is carried out after preliminary investigations are over and the investor is serious about
putting in money. It is a way for the investor to check if what you say is actually so and discover the true state of affairs.
From the amount demanded $2500 it is obvious that your's is not a large business and your investor is
a mickey mouse operator.
The best way out of the situation is
1. Don't pay her/him immediately check if they are more interested in doing the due diligence or the $2500.
2. Invite other investors into the arena aggresively.
If yours is a business which can be scaled up substantialy even venture capital funds may want to put in money.
Go to original post
Reply to original post
I have been contacted by a potential investor who is requesting a "due diligence fee" $2500.00. Is this common practice when investing in a start-up business. Also is it common practice to not provide referrals to potential customers, or is that considered confidential information? Any thoughts here?