Coverage: due diligence checklist for startups, investor due diligence, startup due diligence process, due diligence documents, VC checklist 2025, startup legal checklist, financial due diligence for founders, early-stage funding
📈 Introduction: Why Due Diligence Can Make or Break Your Funding Round
You’ve had multiple investor meetings, your pitch deck landed well, and you’re close to a term sheet — but now comes the part that separates prepared founders from the rest: due diligence.
Whether you’re raising a pre-seed, seed, or Series A round in India, the UAE, or broader Middle East, investors will run a detailed due diligence process before wiring any capital. This includes reviewing your financials, team, legal structure, market data, and overall business hygiene.
In this guide, we break down the ultimate due diligence checklist for startup founders, what documents to prepare, and how to ensure a smooth process that builds trust with investors and speeds up your deal closure.
🧠 What Is Due Diligence in Startup Fundraising?
Due diligence is the process investors use to verify the claims you made in your pitch deck, understand risks, and evaluate whether your startup is investment-worthy. Think of it as the “home inspection” before closing a real estate deal.
Types of Due Diligence:
- Business & Commercial: Validates the market, traction, and product roadmap
- Financial: Reviews your revenue, expenses, projections, and runway
- Legal: Checks incorporation, IP, contracts, and compliance
- Technical (for SaaS/deeptech): Reviews codebase, scalability, tech stack
- HR & Team: Assesses founder alignment, ESOPs, and employee agreements
💡 Pro tip: Start preparing these documents before you begin outreach to investors — not after.
✅ Complete Due Diligence Checklist for Startup Founders
Here’s a founder-friendly due diligence checklist, organized by category, that works for pre-seed to Series A rounds.
📁 1. Company Incorporation & Structure
- Certificate of incorporation (India: MCA docs; UAE: ADGM, DIFC, or DED license)
- Shareholder agreement (SHA)
- Memorandum & Articles of Association (MOA, AOA)
- Company PAN card, GST, and registration details (for India)
- Company bank account details
👥 2. Founding Team & ESOPs
- Founder bios and LinkedIn profiles
- ESOP policy and option pool structure
- Employment contracts for key team members
- Advisor contracts and equity allocation
- Vesting schedules and cliff periods
⚠️ Red flag: Cap table with too many early equity grants to non-active contributors.
📊 3. Financial Statements & Projections
- Historical P&L (Profit & Loss) for last 12–24 months
- Balance sheet and cash flow statements
- Runway calculation and burn rate
- 12–36 month financial forecast with assumptions
- Unit economics (CAC, LTV, Gross margin)
🧠 Tip: Use tools like Google Sheets, Baremetrics, or QuickBooks to automate clean reporting.
💼 4. Cap Table & Previous Fundraising
- Detailed cap table with ownership %, valuation, and investor names
- SAFEs, convertible notes, or equity agreements from previous rounds
- Valuation history (pre/post-money for each round)
- Use of funds from prior capital raised
📌 Clean cap tables = higher trust and faster closure
📈 5. Traction & Business KPIs
- Revenue (MRR/ARR/GMV), active users, retention
- Monthly growth metrics and charts
- Customer testimonials, case studies, or pilot results
- CRM or funnel snapshot (HubSpot, Salesforce, Pipedrive)
- Market validation reports (TAM/SAM/SOM)
🧾 6. Product & Tech Stack
- Product roadmap (past, present, and future)
- Architecture diagram or tech overview
- Codebase access (if requested post-term sheet)
- Hosting info (AWS, Azure, etc.)
- IP ownership and patent filings (if any)
🔐 Ensure all IP is assigned to the company, not to individual developers or freelancers.
📄 7. Contracts & Legal Agreements
- Customer contracts / LOIs / MOUs
- Vendor and supplier agreements
- Partnership or distribution agreements
- NDA templates
- Any litigation or legal disputes (past or current)
🚫 Missing or outdated contracts are often a red flag in VC due diligence.
🏢 8. Market Research & Competitive Landscape
- Industry reports or founder-compiled market research
- SWOT analysis or market gap analysis
- Competitor matrix (product, pricing, GTM)
- Insights from customer surveys or interviews
👩⚖️ 9. Compliance & Regulatory Docs
- Tax filings (India: GST, ITR; UAE: VAT filings)
- Labor law compliance (PF, ESIC in India)
- Relevant licenses or certifications
- GDPR, data privacy, or HIPAA compliance (if applicable)
📬 How to Share Due Diligence Docs with Investors
Use a secure, well-organized data room (see our full data room checklist) with tools like:
- Google Drive / Dropbox: Free and widely accepted
- DocSend: Track document opens and shares
- Notion: Clean and shareable founder wiki
- SeedLegals / Carta: Great for cap tables and legal docs
📌 Always share “view-only” access with folder-level control.
🔍 What Investors Look for in Due Diligence
✅ Green Flags:
- Clean, logical folder structure
- Realistic and backed-up financials
- Clear legal ownership of IP and equity
- Responsive founders with data readiness
- Transparent disclosures (even for negatives)
🚩 Red Flags:
- Disorganized or missing documents
- Incomplete cap tables or unvested co-founders
- Lawsuits or IP issues
- Inflated metrics with no supporting data
- Unclear or shifting financial projections
💬 Due Diligence Questions Founders Must Prepare For
- Who owns the IP? Is it assigned to the company?
- What’s your customer churn rate?
- How much revenue comes from your top 5 clients?
- Do you have formal agreements with team members?
- How much equity is allocated to ESOPs?
- Have you used all previously raised capital as planned?
🧠 Due Diligence Tips from Indian & GCC VCs
“Start building your data room the day you start the company. It shows you think like a builder, not just a dreamer.”
— Seed VC, India
“In GCC, compliance and founder transparency matter more than vanity metrics.”
— Early-stage investor, UAE
“Don’t hide your mistakes — investors prefer founders who own their past and fix fast.”
— Micro VC, Saudi Arabia
📥 Free Download: Due Diligence Checklist Template (Excel + Google Drive)
→ Download the editable checklist used by 500+ founders to prepare for due diligence
→ Includes: Templates for cap table, document index, and folder structure
→ Access at: FounderFirst.org/due-diligence-checklist
✅ Final Advice: Build Trust Through Preparation
Fundraising isn’t just about pitching — it’s about proving your startup is fundable, investable, and resilient. A great due diligence experience can accelerate funding, increase valuation, and help you close stronger, smarter investors.
If your story checks out — and your data backs it up — the capital will follow.
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