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 "@id": "https://wulfkaal.github.io/entities/due-diligence",
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 "name": "Due diligence",
 "termCode": "due-diligence",
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 "author": {
  "@type": "Person",
  "name": "Wulf A. Kaal",
  "identifier": "https://orcid.org/0000-0003-0757-275X"
 },
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  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2998097-028",
   "identifier": "kaal:claim:2998097-028",
   "text": "Despite the rising relevance of investment due diligence and increasing due diligence litigation, the private fund industry is largely left to its own devices to ensure adequate due diligence standards.",
   "abstract": "Despite the increasing relevance of investment due diligence in the capital formation and allocation process and despite increasing litigation in the context of investment due diligence, the industry is mostly left to its own devices to ensure adequate due diligence standards apply.",
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "datePublished": "2017",
   "claim_type": "failure",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "private fund investor due diligence",
    "United States, since the 2008 to 2009 financial crisis"
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   "status": "current"
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  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2998097-029",
   "identifier": "kaal:claim:2998097-029",
   "text": "Since 2010 private fund advisers increasingly engaged in investor due diligence partly to protect themselves from investor criticism and lawsuits, rather than in response to regulatory mandate.",
   "abstract": "the data provided in the author's study suggested that since 2010 private fund advisers increasingly engaged in private fund investor due diligence, partially in an effort to protect themselves from investor criticism and lawsuits.163 Since",
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "datePublished": "2017",
   "claim_type": "empirical",
   "confidence": "evidenced",
   "is_failure_mode": false,
   "scope_conditions": [
    "SEC Form ADV Part II filings 2007 to 2014, N=100392",
    "due diligence litigation record 1995 to 2015, N=572"
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   "@id": "https://wulfkaal.github.io/claims/2998097-030",
   "identifier": "kaal:claim:2998097-030",
   "text": "The legal standards applicable to private fund investor due diligence are somewhat inconsistent and suboptimal and merit clarification.",
   "abstract": "The study demonstrated that the legal standards applicable to private fund investor due diligence were somewhat inconsistent and suboptimal and merited clarification.",
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "datePublished": "2017",
   "claim_type": "failure",
   "confidence": "evidenced",
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   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2998097-031",
   "identifier": "kaal:claim:2998097-031",
   "text": "The absence of due diligence standards traces to private funds' unique market position: unlike mutual funds, private funds evolved as unregistered entities free from most regulatory oversight, so their investor due diligence also evolved without oversight.",
   "abstract": "Lack of standards for private fund investor due diligence could partially be attributed to private funds' unique position in markets—unlike mutual funds, private funds evolved as unregistered entities, free from most regulatory oversight. Accordingly, private fund investor due diligence evolved",
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "datePublished": "2017",
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   "is_failure_mode": false,
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    "private funds compared with mutual funds",
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   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2998097-032",
   "identifier": "kaal:claim:2998097-032",
   "text": "Private investment fund due diligence may follow the same trajectory as banks' risk evaluation, which moved from unstandardized general strategies in the early 2000s to a heavily regulated and scientific practice today.",
   "abstract": "investment fund due diligence may follow the same evolution as banks' risk evaluation. Whereas in the early 2000s banks operated with general risk evaluation strategies but no uniformity and no applicable standards, today banks' risk evaluation is heavily regulated and turned into a science.",
   "citation": "Wulf A. Kaal, Private Investment Fund Regulation - Theory and Empirical Evidence from 1998 to 2016 (2017). SSRN: https://ssrn.com/abstract=2998097",
   "datePublished": "2017",
   "claim_type": "predictive",
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    "analogy to the evolution of bank risk evaluation"
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   "@id": "https://wulfkaal.github.io/claims/3067615-005",
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   "text": "Because whitepapers are not audited by any authority, the preliminary steps of the ICO roadmap, project announcement, executive summary, and investor comments, carry the burden of building market credibility and investor trust in the soundness of the project.",
   "abstract": "Whitepapers are not audited by any authority. Therefore these preliminary steps are crucial in order to build a general market credibility and investors' trust in the soundness of the project",
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "datePublished": "2017",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "standard ICO roadmap practice as of 2017"
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   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/3067615-031",
   "identifier": "kaal:claim:3067615-031",
   "text": "Private initiatives are emerging to fill the ICO disclosure and rating gap, including a joint venture between Ambisafe and the rating agency ICOrating created to ensure high quality standards and support investor due diligence.",
   "abstract": "To combat these shortcomings, a private initiative, a joint-venture between Ambisafe Inc.59 and the Russian-based rating agency ICOrating,60 has been created to ensure high-quality standards, supporting investors in their due-diligence",
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "datePublished": "2017",
   "claim_type": "empirical",
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   "@id": "https://wulfkaal.github.io/claims/3067615-032",
   "identifier": "kaal:claim:3067615-032",
   "text": "Identifying legitimate projects and distinguishing them from scams is a necessary condition both for investor protection and for creating the conditions in which ICOs can proliferate.",
   "abstract": "Identifying legitimate projects, distinguishing them from scams, is vital to pursue investors' protection while creating the conditions for ICOs to proliferate.",
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "datePublished": "2017",
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   "@id": "https://wulfkaal.github.io/claims/3067615-033",
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   "text": "Zombie ICOs, which have little chance of creating a successful market for their tokens, became increasingly common in 2017 and are identifiable by their inability to answer core questions about the problem solved, the allocation of proceeds, the viability of the product, and the team's business experience.",
   "abstract": "\"Zombie ICOs\" are ICOs that really have little chance of creating a successful market for their tokens. Such ICOs have become increasingly common in 2017. Zombie ICOs often cannot succinctly answer core questions in their whitepaper or in response to questions by possible investors.",
   "citation": "Wulf A. Kaal, Marco Dell'Erba, Initial Coin Offerings Emerging Practices, Risk Factors, and Red Flags (2017). SSRN: https://ssrn.com/abstract=3067615",
   "datePublished": "2017",
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   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/3606663-017",
   "identifier": "kaal:claim:3606663-017",
   "text": "Early stage investing in digital assets is a relationships business, and without access to a network of core industry expertise early stage investments in the digital asset industry are rarely successful.",
   "abstract": "Without access to a network of core expertise early stage investments in the digital asset industry are rarely successful.",
   "citation": "Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663",
   "datePublished": "2020",
   "claim_type": "condition",
   "confidence": "asserted",
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    "early stage investors in digital asset startups"
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   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/3709041-040",
   "identifier": "kaal:claim:3709041-040",
   "text": "Complete supply chain tracking is particularly difficult in the mineral industry because of the prevalence of smelting during processing, which is why supply chain mapping for conflict mineral due diligence is costly, time intensive, and not entirely effective.",
   "abstract": "Complete tracking is particularly difficult in the mineral industry because of the prevalence of smelting during processing.",
   "citation": "Kaal, Blockchain Technology for Good (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3709041",
   "datePublished": "2020",
   "claim_type": "failure",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "applies to conflict mineral due diligence under US disclosure requirements"
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   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/3962614-006",
   "identifier": "kaal:claim:3962614-006",
   "text": "Because time spent raising capital from limited partners is time taken away from portfolio company due diligence, the current VC model tends to reflect the networking and public relations ability of the general partner instead of their capital allocation ability.",
   "abstract": "Because of this dynamic, the current VC model tends to reflect the networking and public relations ability of the VC's general partner instead of their capital allocation ability.",
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "datePublished": "2021",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": true,
   "scope_conditions": [
    "traditional fiat VC funds that must continuously raise capital from limited partners"
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   "@id": "https://wulfkaal.github.io/claims/3962614-014",
   "identifier": "kaal:claim:3962614-014",
   "text": "Because traditional VCs need to defend their investment choices to their own investors, they are often reluctant to invest in digital asset startups that have little history or sales records.",
   "abstract": "Traditional VCs are often also not able to effectively invest in the digital asset market because they need to defend their investment choices to their own investors. Because of that, traditional VCs are often reluctant to invest in digital asset startups with little history or sales records.",
   "citation": "Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614",
   "datePublished": "2021",
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   "@id": "https://wulfkaal.github.io/claims/4685567-037",
   "identifier": "kaal:claim:4685567-037",
   "text": "For venture capital funds, an impact certificate listing performs a due diligence function, because the follow on investor inherits all the project performance data generated through the impact certificate marketplace.",
   "abstract": "Through the projects' success that is validated through the impact certificate, the venture capital follow-on investment benefits from all the project performance data that is generated through the impact certificate marketplace.",
   "citation": "Wulf A. Kaal, Impact Investing Innovation - From Impact 1.0 to 3.0 (2024). SSRN: https://ssrn.com/abstract=4685567",
   "datePublished": "2024",
   "claim_type": "design",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "projects with larger capital requirements over time",
    "impact validated through the certificate"
   ],
   "source_pdf_sha256": "87fb1be89d2661967ed2b0b673fe26448ded3bc3119b122177a4fc13ae5c085c",
   "status": "current"
  }
 ],
 "description": "14 claims in the published works of Wulf A. Kaal carry the concept tag 'due-diligence'. Derived node: a roster, not an adjudicated definition."
}