Fundraising? Don’t Pitch Without This Startup Due Diligence Checklist

You’ve got the pitch deck ready, your product demo is completed, and investor meetings are lined up. But before you head into that big fundraising conversation, there’s one crucial step you can’t afford to skip: startup due diligence. Whether you’re raising a seed round or a Series A, being investor-ready means more than having a great idea. It means being compliant, transparent, and audit-proof.

So, what exactly goes into a startup due diligence checklist?

Legal Documentation
Investors will want to see clean and consistent legal documentation. This includes:

1. Certificate of Incorporation
2. Founders’ agreements
3. Shareholder agreements
4. Board resolutions
5. IP assignments and licensing agreements

Ensure your company structure is clear and that any shareholding or ESOP plans are properly documented. Having legal paperwork organised not only builds trust but also prevents hiccups during deal closure.

Financial Compliance
Investors want to ensure the financial health of the company and compliance status to avoid any surprises. With this in mind, please ensure the following to begin with:

1. Hygiene in book-keeping and accounting practices need to be ensured
2. Records and file management is an important aspect for the financial discipline
3. Accurate and updated financial statements (profit/loss, balance sheet) to show a true and fair view
4. Tax returns are filed within defined timelines as per statutory norms including Withholding tax, and GST returns
5. Proper tracking of ongoing Tax assessments and notices are resolved.

Keeping your books clean and transparent is essential to show you’re running a well-managed business.

Corporate Governance
Investor readiness needs a basic governance structure:

1. Board composition and meeting minutes
2. Policies on ethics, anti-bribery, and data security
3. Statutory registers and fundraising compliance calendars

Good governance sets the tone for your startup’s culture. It shows that leadership is organised, decisions are recorded, and risks are mitigated proactively.

Market and Product Validation
Before investing, most VCs will ask:

1. Is there a real market need?
2. What traction does the product have?
3. Are customer testimonials or pilots available?

Numbers talk. Investors want to see adoption rates, retention data, and user feedback. If you’re pre-revenue, show pilot results, waitlists, or letters of intent. Demonstrating product-market fit strengthens your case.

Cap Table Hygiene
A messy cap table is an investor’s nightmare. Ensure:

1. Founders and co-founders have clearly defined stakes
2. Past investments, SAFE notes, and convertible debts are recorded
3. ESOPs are carved out transparently

An updated and easy-to-read cap table reflects professional management, reducing investor concerns.

Regulatory Licences
Depending on your sector, ensure you have the right:

1. FSSAI, SEBI, RBI or industry-specific approvals
2. Environmental or labour clearances
3. Shop and Establishment Act registrations

This is especially important for fintech, food, or healthcare startups. Non-compliance with industry regulations can be a deal-breaker. Always double-check expiry dates and renewal requirements.

IP and Tech Diligence
If tech is your moat, prove it:

1. Patent filings or copyright registrations
2. Source code and version control access
3. Tech stack documentation
4. NDA clauses with vendors and employees

This reassures investors that your intellectual property is secure and can be defended. It’s also worth performing internal audits to ensure that third-party claims do not encumber your intellectual property.

Founders’ Background Checks
More than 70% of investors now run background checks on founding teams. Ensure your digital footprint is professional and that any past litigation or disputes are transparently addressed. Social media presence, press coverage, and even previous employment history may be reviewed.

Data Room Preparation
Having a structured data room shows you’re prepared:

1. Organise files by category: legal, financial, HR, product, etc.
2. Use folders with clear naming conventions
3. Grant access via secure platforms with version control

Investors appreciate a startup that respects their time and attention. A well-managed data room often sets the tone for a positive investor relationship.

Startup due diligence is about building a foundation of trust. Startups that breeze through fundraising compliance are those that treat diligence as an ongoing hygiene practice, not a last-minute scramble.

Think of this checklist as a pre-flight safety check. The better prepared you are, the smoother the journey. So, before you pitch, run through this checklist. Investor readiness is your first real pitch.

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