Checklist

The Complete Due Diligence Checklist

Your Seed to Series A Fundraising Survival Guide

Due diligence checklist and documentation preparation

Why 73% of Startup Deals Stall During Due Diligence

You've crushed the pitch meetings. The term sheet is signed. Your investors are excited about the partnership ahead. Then comes the moment every founder dreads: the due diligence checklist hits your inbox.

What should be a celebratory sprint to closing suddenly becomes a nightmare of missing documents, scattered financial records, and frantic late-night searches through old email threads. Sound familiar?

Here's the brutal reality: Most startups enter due diligence completely unprepared. They've spent months perfecting their pitch deck while their operational foundation crumbles behind the scenes. The result? Deals that should close in 4-6 weeks drag on for months, valuations get slashed, and worst of all – promising rounds simply collapse under the weight of operational chaos.

This comprehensive guide will ensure you never become one of those statistics.

The Hidden Costs That Kill Deals

Before diving into the checklist, understand exactly what's at stake when you're unprepared:

Time Equals Burning Cash

Every week spent scrambling for documents is runway consumed. While you're playing document detective, your competitors are closing customers and hitting milestones. Investors notice when momentum stalls.

Valuation Erosion is Real

Disorganization signals operational immaturity to sophisticated investors. Missing IP assignments, messy cap tables, or incomplete financial records give investors leverage to demand lower valuations or additional protective terms.

Deal Fatigue Kills Momentum

Fundraising operates on momentum. Every delayed response, every "we'll get that to you next week," every inconsistency in your records chips away at investor enthusiasm.

Emergency Professional Fees Skyrocket

Rushing to fix issues during active due diligence means paying premium rates to lawyers, accountants, and consultants for last-minute solutions.

The bottom line: Proactive due diligence preparation isn't an expense – it's insurance that protects your deal, preserves your valuation, and accelerates your fundraising timeline.

The Complete Due Diligence Checklist

This checklist covers every document and process investors examine from Seed through Series A. Use it as your preparation roadmap months before you start fundraising.

1
Financial Due Diligence: The Foundation of Investor Confidence

Core Financial Statements

  • • Historical Financials (2-3 years or since inception): P&L, Balance sheets, Cash flow statements
  • • Current Year Financials: Up-to-date P&L, balance sheet, monthly management reporting
  • • Audit Documentation: Audited statements, management letters, representation letters

Financial Projections and Business Modeling

  • • Detailed Financial Model (3-5 years) with clear drivers and assumptions
  • • Unit Economics Analysis: CAC, LTV, payback periods, contribution margins
  • • SaaS Metrics Dashboard: MRR, ARR, NDR, GRR, churn rates, sales efficiency

Banking and Treasury Management

  • • Banking Documentation: Statements, reconciliations, cash management policies
  • • Debt and Credit Facilities: Loan agreements, payment schedules, covenant compliance
  • • Tax Documentation: Corporate tax returns, VAT/sales tax, compliance certificates

2
Legal and Corporate Due Diligence: Protecting Investor Rights

Corporate Governance Foundation

  • • Formation Documents: Certificate of incorporation, articles/bylaws, amendments
  • • Shareholder and Board Documentation: Agreements, meeting minutes, voting agreements
  • • Corporate Registers: Directors, shareholders, charges, significant controllers

Intellectual Property Portfolio

  • • IP Assignment agreements from ALL founders, employees, contractors
  • • Patent, trademark, and copyright registrations with prosecution history
  • • Licensing agreements: Inbound/outbound licenses, joint development agreements

Material Commercial Contracts

  • • Customer Agreements: Top 20% by revenue, master service agreements, SOWs
  • • Vendor and Supplier Contracts: Material vendor agreements, critical service providers
  • • Strategic Partnerships: Channel partners, integrations, joint ventures

Employment and HR Documentation

  • • Employment contracts with compensation details and equity agreements
  • • Stock option plan documents and grant agreements
  • • Litigation documentation and settlement agreements

3
Technical and Product Due Diligence: Demonstrating Scalability

Product and Technology Overview

  • • Product Documentation: Roadmap, specifications, product-market fit evidence
  • • User and Usage Analytics: Acquisition, retention, engagement, support metrics

Technology Architecture and Infrastructure

  • • System Architecture: Diagrams, database design, API documentation, scalability analysis
  • • Technology Stack Documentation: Complete inventory of languages, frameworks, libraries
  • • Third-Party Dependencies: Critical services, open-source usage, vendor risk assessment

Development and Security

  • • Software Development Lifecycle: Methodology, code review, testing, CI/CD
  • • Security Framework: Policies, incident response, training, penetration testing
  • • Infrastructure and Operations: Cloud architecture, monitoring, backup, disaster recovery

4
Data Privacy and Compliance: Meeting Regulatory Standards

Data Privacy and Protection

  • • Privacy Policy Framework: Comprehensive policies, consent management, data subject rights
  • • GDPR and Regional Compliance: ROPA, DPIAs, DPAs, Data Protection Officer appointment
  • • Data Security and Breach Management: Security policies, breach response, training, retention

Industry-Specific Regulatory Compliance

  • • Financial Services: Licenses, AML/KYC procedures, consumer protection, PCI compliance
  • • Healthcare and Life Sciences: HIPAA compliance, FDA approvals, clinical trials
  • • Other Industry Regulations: Sector-specific licenses, professional accreditations, export control

5
Management and Human Resources: Team and Culture Assessment

Organizational Structure and Leadership

  • • Organization and Reporting: Current org chart, growth plans, succession planning
  • • Leadership Team Documentation: Executive resumes, references, development strategies

Human Resources Policies and Procedures

  • • HR Policy Framework: Employee handbook, anti-harassment policies, remote work
  • • Compensation and Benefits: Salary bands, bonus plans, benefits packages, equity policies
  • • Employee Relations: Satisfaction surveys, retention strategies, training programs, DEI initiatives

Beyond the Checklist: Achieving True Deal Readiness

Having a comprehensive checklist is the first step, but the real challenge lies in execution. Gathering, organizing, cleaning, and often creating the required documentation is time-intensive work that requires specialized expertise across multiple disciplines.

The Real Cost of DIY Due Diligence Preparation

Time Investment

Proper preparation typically requires 200-400 hours of focused work across multiple functional areas. For busy founders, this can stretch over 6-12 months.

Expertise Requirements

Each section requires specialized knowledge. Few founding teams have comprehensive expertise across all areas.

Opportunity Cost

Every hour spent on document preparation is time not invested in product development, customer acquisition, or strategic planning.

Quality Risk

Incomplete or poorly organized documentation signals operational immaturity to sophisticated investors.

The Strategic Value of Professional Deal Readiness

Professional deal readiness services transform due diligence from a painful obligation into a competitive advantage:

  • Accelerated Timeline: Professional preparation typically reduces due diligence time from 12-16 weeks to 4-6 weeks
  • Valuation Protection: Clean documentation eliminates investor leverage to demand valuation discounts
  • Competitive Differentiation: Operational excellence distinguishes your company from less organized competitors
  • Future Optionality: Well-prepared companies can pursue multiple funding sources simultaneously
  • Organizational Asset Creation: Creates lasting improvements in financial reporting and operational systems

Take Action: Don't Let Due Diligence Kill Your Next Round

Due diligence preparation isn't just about avoiding problems – it's about creating competitive advantages that accelerate growth and improve fundraising outcomes. The most successful startups treat operational readiness as a strategic priority, not an afterthought.

Use this checklist to assess your current readiness level. If you find significant gaps or lack the internal expertise to address them systematically, consider the strategic value of professional deal readiness services.

Remember: the cost of preparation is always less than the cost of a failed or delayed fundraising round. In the competitive startup funding environment, operational excellence isn't optional – it's the price of entry for institutional capital.

Ready to Get Deal Ready?

Start with this checklist, but don't try to tackle it alone. The most successful founders invest in the expertise needed to get it right the first time.