Financial due diligence in an investment process is rigorous. Auditors verify accounts, lawyers analyse contracts, commercial teams validate the market. What no one systematically verifies is what surrounds the deal - the people rather than the numbers.
This is where most of the problems that surface at board level after closing are hiding.
The founder: what the pitch deck doesn't show
A founder presents their background in a pitch deck. They mention past experiences, successes, exits. What they do not mention - because no one asks them to independently - is the company dissolved before this one, the dispute with a previous associate, the liquidation passed over in silence, or public positions that contradict the startup's stated values.
These elements are not necessarily deal-breakers. But they deserve to be known before closing, not after. A founder with a well-documented and acknowledged past failure is one thing. A founder who omitted to mention it is another - and it says something about the quality of the trust relationship being built.
The co-investor: the structure behind the structure
In funding rounds, co-investors typically arrive through referral or introduction. Their reputation in the ecosystem generally suffices to validate their presence in the cap table without anyone looking more closely.
Yet the structure behind a co-investor - the family office carrying the ticket, the intermediate entity channelling funds, the actual beneficial owners - can create exposures the lead investor had not anticipated. An undisclosed PEP beneficial owner. A holding jurisdiction under regulatory monitoring. An indirect link to a controversial actor that creates reputational risk at IPO exit or LP audit.
These elements do not appear in the documents the co-investor provides. They surface in the cross-referencing of open sources: multi-jurisdiction registries, international databases, press archives.
Key commercial partners: the post-closing risk
The third category is the most surprising: the commercial partners of portfolio companies. A customer representing 40% of ARR. A supplier on whom production depends. An exclusive distribution agreement signed six months before closing.
If that partner presents vulnerabilities - suspended licence, director with a problematic history, dependence on an opaque offshore structure - it is the portfolio that bears the consequences after investment. And these are elements that standard financial due diligence does not cover, because it stops at the target company, not its commercial ecosystem.
Before and after closing: two distinct moments
At YMV & Co., we intervene at two moments in the investment cycle. Before closing, alongside financial and legal due diligence, to verify key people - founders, co-investors, operational executives - and critical commercial relationships. After closing, for new hires, significant partnerships and co-investors entering subsequent rounds.
The deliverable is a structured, sourced Go / No-Go / Monitor report, designed to remain defensible at board and AIFM level if a decision is ever questioned.