Credit / Founder Background Checks
So, you and your advisor want to know more? Getting more serious about this investment opportunity, are we? This is where your Due Diligence drills deeper.
What would be a loan or mortgage from a bank or creditor without the background checks? As you recall you are becoming the banker/creditor once you make this investment. Before transferring any funds—you should have conducted two very important background checks.
Credit Check
A bank or creditor conducts credit checks with all three credit bureaus because they want to understand the creditworthiness of the person or entity they are loaning their money. For a company, this might also involve a check with the Better Business Bureau (BBB). Just as with a company’s financials, a bank wants to know the net worth of the individual they are loaning to; their ability to pay back the loan (plus interest) and their track record in previous loans and lines of credit.
You should know this about the people and entity you are loaning (investing) your money to as well! A credit check is relatively routine but you will need the social security numbers, date of birth, full names and permission from each of the company principals. In this case, you will want to run a credit check not only on Jang’s company but that of each of the company principals, Andrew Jang, and Travis Swanson.
This information will not only give you and your advisor an idea of their creditworthiness but it may also supply you with other important questions that should be answered in your due diligence.
“No matter how much you may like and trust the salesman, a prudent investor always lives by the mantra:
‘Trust but Verify’”
Founders Background Check
It is only human to want to do business with the salesman who you like and trust from the moment you met. But who is the real person behind the sparkling toothed salesman? Who is really taking your money and how will they really use it? What sort of fiduciary ethics does this person have while they are in control of your money? What does their investment track record look like?
No matter how much you may like and trust the Salesman, a prudent investor always lives by the mantra: “Trust but Verify”. In this case, you will want to verify with a background check on each of the founders/principals of the company. Unlike credit checks, this may be more time-consuming and expensive to drill as deep as an investor should.
Fortunately for you and your advisor, you can find extensive background research in the Founders Background section of this website. This data is fully documented with court, government and legal findings collected from various investors before you, spanning over ten (10) years of investigations.
This will prove exceptionally helpful in determining what questions you should be exploring in your due diligence and to better gauge your own comfort level and risk aversion.
Investor Tip
Sometimes unsavory discoveries occur during a background check. But, people also change and learn from their mistakes. Should you encounter the admittance of past mistakes and the desire to “make it right”, ask for examples of how mistakes were atoned with past investors. Put these investors on your “to call” referral list—and verify.