Due diligence is the investigation investors conduct before finalizing investment. Key areas: (1) Financial: revenue, burn rate, unit economics, projections, cap table. (2) Legal: incorporation, IP ownership, contracts, compliance, litigation. (3) Team: background checks, references, employment agreements, vesting. (4) Product/Tech: code review, architecture, security, scalability. (5) Market: TAM/SAM/SOM validation, competition, customer references. (6) Commercial: customer contracts, pipeline, churn, NPS. Prepare a data room with organized documents. Process takes 2-6 weeks. Common deal-killers: cap table issues, IP disputes, undisclosed liabilities, team misrepresentation.
Key Startup Due Diligence Checklist Takeaways
- Financial: revenue, burn, unit economics, projections
- Legal: incorporation, IP, contracts, compliance
- Team: background checks, references, agreements
- Product: code review, architecture, security
- Market: TAM validation, competition, customers
- Commercial: contracts, pipeline, churn, NPS
- Prepare organized data room in advance
- Process takes 2-6 weeks typically
- Deal-killers: cap table issues, IP disputes
- Be transparent—hidden issues always surface
Startup Due Diligence Checklist Statistics
2-6 weeks
typical DD timeline
100+
documents often requested
30%
of deals fail in DD
6
key DD areas