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Venture capitalists and private equity firms make their livelihoods on assessing risk and opportunity of potential portfolio companies. Industry landscapes, competitive threats, unique selling propositions – diagnosing those factors is fundamental to successful investments.

 

Where investors may have a blind spot is digital marketing, where a treasure chest of data and insights can help keep investors from taking unnecessary risk – or reveal latent growth opportunity that could have a tremendous payoff down the road.

What kind of insights? Consider the most frequent questions we’ve answered for some of Silicon Valley’s most high-powered investors:

– How much opportunity is there if the target company tried to scale digital media spend?

– What would happen if Amazon started competing in our target company’s vertical?

– Is the website of the target company optimized for the action we want the user to take?

– Will Google’s new products (e.g. Knowledge Graph, App Carousel, Hotel Search) steal traffic from the target company?

– Was the site recently hit with a penalty, and what was the opportunity cost of that penalty?

– Is the target company currently using the right media mix to achieve its acquisition goals?

– Is the company going to be on the right side of Google after taking into account its recent algorithm changes?

– Are there major threats in the space that would artificially inflate costs as we look to scale?

These questions target both short- and long-term implications for a company’s ability to grow and scale. Digital due diligence can reveal more about a company’s potential for growth (and risk), especially hidden in paid search and paid social accounts. If you’re an investor, or a company looking to attract investors,  consider the insights to be gained from the digital landscape.