Investor Due Diligence
Due Diligence for Private Investments in Early- and Growth-Stage Companies
Mordy Steinfeld, CFE, is an independent due diligence consultant who provides investment due diligence for family offices, private investors and angels backing early-stage startups and growth-stage companies. He handles both the diligence and the deal terms, working out a structure that gives the investor and the founders what each needs, such as funding released against milestones.
Who It's For
Family offices and private investors
Family offices, private investors and angels making private investments in early-stage startups and growth-stage companies, across the US. For buying a business outright, see acquisition due diligence.
What's Covered
The diligence, and the terms that follow from it
Mordy covers both sides of the decision: what the company's numbers and plan support, and how the investment is structured.
- Financial due diligence on the company's numbers and plan
- Commercial due diligence: the market, customers and competition, and whether the growth story holds up
- Deal structuring and term negotiation, using tools such as milestone-tranched funding, convertible notes, equity adjustments, performance milestones on both sides, or a valuation subject to independent appraisal
- Feasibility and financial modeling
- Management and operations, where the investment calls for it
Founder-Side Experience
The founder's side of the table
Mordy co-founded Bellhop Solutions, a hotel-tech startup building a universal integration layer for hospitality technology. It raised a $250K seed round and delivered every product milestone on schedule.
Selected Engagements
Investor diligence in practice
Investor Due Diligence
$12.5M RoundDigital-Health Rehabilitation Platform
Diligence and deal terms for the round's lead investor. Mordy's redlines released the money against milestones rather than up front, deferring about a year of cash, and turned pre-closing payments into convertible loans. They also made the valuation subject to an independent appraisal, and kept binding protections to the points that mattered.
Investor Due Diligence
Diligence & Full Deal StructuringAI-Driven Risk Intelligence
Mordy handled the due diligence and all of the deal structuring for an investor in an AI-driven risk-intelligence company.
Investor Due Diligence
Milestone-Based InvestmentCommunications-Risk and Compliance SaaS
Due diligence and investment structuring for an investor in an AI-powered communications-risk and compliance platform: funding released in milestone tranches, equity adjustments, and performance milestones on both sides.
Frequently Asked Questions
The founders' projections look great. How do I know they're real?
No one can confirm a projection in advance, so Mordy works on both ends. He tests the numbers and the plan behind them, rebuilding the revenue model from the company's own records, such as customer, pricing and pipeline data, and testing each assumption against them. He also ties the money to results. On a $12.5M digital-health round, for example, his redlines released the money against milestones rather than up front, deferring about a year of cash.
Can the terms protect me if the company misses its plan?
Terms can limit how much is at risk. Mordy has structured investments with funding released in milestone tranches, equity adjustments, and performance milestones that bind both sides.
The company wants money before closing. What then?
It can be structured. On one investment, Mordy turned the pre-closing payments into convertible loans, so the money went in as a loan that can convert to equity rather than as an outright payment.
We don't agree with the founders on valuation. Now what?
One way through is an independent appraisal. On one investment, Mordy's redlines made the valuation subject to one.
Who is your client: us, or the company?
The investor. On each of the investments described above, Mordy was engaged by the investor, not by the company, and he takes no fees or equity from the company.
Do you only look at the numbers, or also the deal terms?
Both. Mordy handles the due diligence and the deal structuring, from the numbers and the plan through the funding schedule, pre-closing payments and valuation terms.
Do you work with our attorney and the lead investor?
Yes. Mordy's redlines cover the business terms; the investor's counsel drafts and finalizes the documents. Where there is a lead investor, he works with its team as well.
Do you understand the founder's side?
Yes. Mordy co-founded a hotel-tech startup that raised a $250K seed round and delivered every product milestone on schedule, so he has been on the founder's side of an investment too.
What kinds of investors and companies do you work with?
Family offices, private investors and angels investing in early-stage startups and growth-stage companies, across the US. Mordy is a Certified Fraud Examiner (CFE) with an MBA from Boston University.
Is this confidential?
Yes. Engagements are confidential, and the examples on this site are anonymized.