Prepared for Anna V. | Delivered June 9, 2020
Virtual Due Diligence
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Obtain insights and case studies that show that the recent adoption of the work-from-home model has lessened the need for in-person diligence by finance companies (such as venture capital and private equity firms).
Virtual Due Diligence
Financial institutions are
compelled to continue their investment activities
even in the current crisis.
Amidst the COVID-19 pandemic situation where physical distancing setups are in effect, investors are discovering
of undertaking due diligence processes.
As an example, the U.S. International Development Finance Corp. is embracing the current operating environment to process highly developmental deals through its
funding approval process.
social enterprise financing team
has been engaged in video calls to perform due diligence with fund managers who are tasked with providing funding to various enterprises.
is a private equity firm that has been engaged in several virtual due diligence sessions since the lockdown starts.
process took five days and involves around 20 participants in various video conferences.
A financial analyst from the firm commented that doing the due diligence process virtually is
as they were able to understand better the companies that they are planning to invest on.
Finnfund also became more agile as a result of this method and is now considering
implementing virtual due diligence
for selected cases in the future.
Amidst the c
, more private equity firms are engaging in deals to invest in technology companies.
such as virtual data rooms enable online due diligence to happen prior to the investment.
Summary of Findings
Our one hour of research provided some insights on the virtual due diligence processes that are being undertaken by financial investing firms amidst the pandemic.
Since social distancing protocols are in place, in-person gatherings are strictly limited and hence we have concluded that more virtual due diligence sessions are happening as investors continue to provide funding.
However, we did not find any evidence that more non-US investors are investing in U.S. companies since May 2020. Based on a report from
, the reverse is happening as the U.S. has put in place more regulations before foreign investors can provide funding to U.S. companies. The intention is to protect the U.S. economy amidst the crisis.