The structured investigation an investor performs before wiring money — covering legal, financial, product, and reference checks.
The structured investigation an investor performs before wiring money — covering legal, financial, product, and reference checks.
Due diligence is the phase between a verbal term-sheet agreement and a signed close. Investors verify what you claimed in pitch: revenue numbers, customer references, cap-table cleanliness, IP ownership, employment and IP-assignment agreements, and outstanding liabilities.
Preparation matters more than founders expect. A ready data room with clean financials, signed IP assignments from every contractor, and reference customers on standby can compress diligence from six weeks to two. The most common close-killers surfaced in diligence: unassigned IP from an early cofounder or contractor, and revenue that doesn't reconcile to bank statements.
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