“Our due diligence process is a little different from most funds,” might be the way the conversation starts. Allow the hair on the back of your neck to stand-up, as it’s the correct autonomic response.

The investor may go on to inform you that they need to pay to develop a financial model for your company, analyze the market opportunity, and conduct a legal review if you have any existing patents, contracts, or licenses. This work costs money, right? And you have been working so hard to find an investor, so spending some money to confirm your own opinions about your business might seem to make sense.