A startup due diligence checklist lists the records investors review before they fund you, grouped into seven areas: corporate and legal, financial, intellectual property, team, commercial, litigation and compliance, and supporting materials. Many founders find it helps to work through it before they raise, so problems get fixed on their own schedule instead of between a signed term sheet and the wire.
Diligence rarely kills a round because of one big problem. It's usually a pile of small ones: an unsigned IP assignment, a grant the board never approved, a cap table that doesn't match the ledger. Each is easy to fix in March and miserable to fix the week before closing.
This page is the scannable version, written from the founder's side. For the full build (numbered folders, what to upload at each stage and a timeline), see our data room checklist.
Definition: Due diligence is the process by which investors or acquirers systematically review and verify a company's business, legal, financial and operational information before completing an investment or acquisition.
Why a startup due diligence checklist matters
- It builds trust. Organized records tell investors you run the company with discipline. CO, the US Chamber of Commerce's small business site, notes that venture firms often receive hundreds of requests each month and quickly pass over companies that look disorganized.
- It surfaces risks early. Missing IP assignments or unapproved option grants are far easier to fix months before a round than days before a closing.
- It speeds up deals. Fewer follow-up requests mean fewer delays between signing a term sheet and receiving the wire.
- It prepares you to scale. The same records support audits, future rounds, acquisitions and board reporting.
To see how the process runs on the other side of the table, read the venture capital due diligence investor guide.
How due diligence depth changes by stage
The depth of review grows with the size and type of the deal:
| Deal | Typical focus | Depth |
|---|---|---|
| Pre-seed or seed on SAFEs | Team, product, market, cap table, IP ownership | Light, often a few calls and a short document review |
| Series A priced round | Everything above plus financials, customer contracts, legal clean-up | Moderate to deep, usually with investor counsel |
| Acquisition | Every category, including tax, employment and liabilities | Deepest, with formal disclosure schedules |
Law firm checklists vary in length. Cooley GO's sample VC due diligence request list is organized into nine top-level categories, from board actions and charter documents to intellectual property, debt and other agreements, and CO's comparison of templates describes it as the most condensed of the three it reviews, next to an UpCounsel list with 19 categories. Treat the checklist below as a baseline to expand for later rounds or an acquisition.
The startup due diligence checklist
1. Corporate and legal
- Certificate of incorporation and all amendments
- Bylaws and amendments
- Board and stockholder minutes and written consents
- Fully diluted cap table that matches your stock ledger
- Equity incentive plan, board approvals and every grant agreement
- Founder stock purchase agreements, vesting terms and 83(b) election copies
- SAFEs, convertible notes, warrants and side letters
- Good standing certificates and state franchise tax filings
- Permits, licenses and regulatory filings
2. Financial
- Most recent annual financial statements (audited, if you have them) and the latest monthly statements, both of which Cooley GO's sample list requests
- Current budget, operating model and projections with stated assumptions
- Bank statements and reconciliations
- Accounts receivable and payable aging reports
- Federal, state and local tax returns
- Loans, credit lines and venture debt agreements
Our investor-side guide to financial due diligence shows how these documents get tested.
3. Intellectual property
- Patents, trademarks, copyrights and domain names, filed and issued
- Invention assignment agreements from founders, employees and contractors
- Inbound and outbound licenses, including open-source usage
- Documentation of proprietary technology and trade secret protections
4. Team and HR
- Offer letters and employment agreements
- Contractor, advisor and consultant agreements
- Employee handbook and key policies
- Summary of compensation, benefits and equity by person
- Immigration and visa documentation where relevant
- Any disputes, claims or terminations for cause
5. Commercial and operational
- Customer and supplier contracts, especially the largest ones
- Sales pipeline and top customer list
- Partnership and channel agreements
- Product roadmap and technical documentation
- Key metrics: revenue, growth, churn, retention, burn and runway
6. Litigation and compliance
- Past, pending or threatened litigation
- Regulatory correspondence and compliance certifications
- Privacy policies and data protection practices
- Insurance policies, such as D&O and general liability
7. Other materials
- Recent board and investor decks
- Investor updates sent in the past 12 months
- Press releases and public statements
- Any other material agreements
Due diligence red flags investors look for
These are the issues we'd expect to come up most often in early-stage reviews:
- Missing IP assignments. If a founder or contractor did not sign one, the company may not own its core product. Our guide on founder agreements covers the basics.
- Cap table mismatches. Investors generally expect the spreadsheet, the stock ledger and the signed documents to agree. We tend to read it before the deck, for reasons we set out in our take on what a cap table reveals. See cap table management.
- Unapproved or unpriced option grants. Options promised in offer letters but not approved by the board, or granted without a current 409A valuation. Carta notes that a 409A valuation is valid for at most 12 months, and for less if a material event such as a financing happens first.
- Missed 83(b) elections. The IRS's Form 15620 instructions say the election must be filed no later than 30 days after the stock is transferred, so investors check that each founder filed on time and kept a copy.
- Contractor misclassification. Core work done by "contractors" who look like employees.
- Information rights you have not honored. Many investor rights agreements, including the NVCA model, require periodic financial statements; Nixon Peabody's summary of the NVCA form cites delivery within 45 days of each quarter and 90 to 120 days of year end.
How to use this due diligence checklist before you raise
- Assign one owner. Make one founder responsible for the checklist and for keeping it current. Shared ownership usually means no ownership.
- Mark every gap. Go line by line and flag anything missing, unsigned or out of date.
- Close the gaps. Missing signatures, board consents and IP assignments are easier to collect now, while nobody is waiting on you.
- Reconcile the numbers. Check that the cap table, financials and metrics in your deck match.
- Consider a short disclosure memo. It can list known issues and how you are addressing them.
Once the gaps are closed, turn the checklist into a secure, permissioned data room. We've shared how we think about a seed deal room too. The data room checklist walks through the folder structure, the documents to add at pre-seed, seed and Series A, and when to open access.
What founders should disclose up front
Disclose first. An issue you raise yourself, with a plan attached, reads as competence. The same issue found by investor counsel reads as either carelessness or concealment, and neither helps your valuation. A known issue can be priced or fixed; a hidden one tends to end the conversation.
Investor counsel often verifies items rather than accepting summaries, with special attention to IP ownership, cap table integrity and unresolved legal matters. That's where they'll dig deepest, so put your cleanest documents there.
Before diligence starts, your pitch deck is usually the first document an investor reviews. 1752vc's Pitch Deck Analyzer gives AI feedback on your deck so the story matches the records behind it.
The bottom line
A clean data room won't win you a round. A messy one can quietly lose it, or cost you a week of legal fees and a little leverage at the worst moment. Work the list while nobody is asking.
Investors fall for the story.
Their lawyers read the paperwork.
Key takeaways
- A startup due diligence checklist covers seven areas: corporate and legal, financial, IP, team, commercial, litigation and compliance, and supporting materials.
- Diligence gets deeper from seed to Series A to acquisition, so build a baseline early and expand it.
- Common red flags include missing IP assignments, cap table mismatches, unapproved option grants and missed 83(b) elections.
- It helps to reconcile your cap table, financials and pitch deck numbers before you share anything.
- Closing gaps before you raise, then keeping a data room current, can make the round smoother.
Frequently asked questions
A startup due diligence checklist typically covers corporate records and the cap table, equity documents, financial statements and projections, IP ownership records, employment and contractor agreements, key customer contracts, and litigation and compliance materials. Later rounds and acquisitions add more detail in each area, and many founders start from a law firm template such as Cooley GO's sample list.
Yes, but it is usually lighter than in a priced round. SAFE investors typically focus on the team, the product, the cap table and whether the company owns its IP, often through a few calls and a short document review. Anything skipped at the SAFE stage is likely to be examined when a priced round brings in investor counsel.
Investor due diligence confirms that a minority investment is sound: clean formation documents, an accurate cap table, IP ownership and credible numbers. Acquisition due diligence goes further because the buyer takes on the whole company, so it adds deep reviews of tax, employment, liabilities and contracts, and ends in formal disclosure schedules.
It depends on the problem. Many issues, such as a missing signature or an unapproved grant, can be fixed with corrective board consents or new agreements before closing. Serious ones, like unclear IP ownership or undisclosed litigation, can lead investors to change terms, add closing conditions or walk away, which is why early disclosure matters.
The lead investor usually runs it, often with its own legal counsel reviewing corporate, equity and IP documents. Other investors in the round frequently rely on the lead's work. In larger rounds and acquisitions, accountants and technical or industry specialists may also review financials, code and security.
Sources
Disclaimer: This guide is for general education only and is not legal, tax or investment advice. Laws, market data and program terms change, so it may not reflect the latest developments or fit your situation. Treat it as a starting point, not a source of truth, and talk to a qualified lawyer, accountant or financial adviser before you make decisions.
