Due Diligence checklist

A comprehensive due diligence checklist is essential for founders preparing for fundraising, acquisition, or partnership. It ensures transparency, uncovers risks, and accelerates deal processes by organizing all critical company information for review.

What is Due Diligence?
Due diligence is the process by which investors or acquirers systematically review and verify a company’s business, legal, financial, and operational details before committing to an investment or acquisition.

Why is it Important?

• Builds Trust: Demonstrates professionalism and transparency to investors or buyers.

• Identifies Risks: Surfaces potential issues early, allowing founders to address them proactively.

• Speeds Up Deals: Well-prepared documentation minimizes back-and-forth and accelerates closing.

• Prepares for Scale: Organizing your company’s records is good governance for future growth.

Due Diligence Checklist for Startups

1. Corporate & Legal

   • Articles of Incorporation and amendments

   • Bylaws and amendments

   • Board and shareholder meeting minutes

   • Cap table (fully diluted)

   • Equity incentive plan and grant agreements

   • Founders’ and employee agreements (including IP assignment)

   • Stock purchase and option agreements

   • Material contracts and customer agreements

   • Outstanding debt or convertible securities

   • Permits, licenses, and regulatory filings

2. Financial

   • Audited and unaudited financial statements (past 2–3 years)

   • Current year budget and financial projections

   • Bank statements and reconciliations

   • Accounts receivable/payable aging reports

   • Tax returns (federal, state, local)

   • Details of any outstanding loans or credit facilities

3. Intellectual Property

   • List of patents, trademarks, copyrights (filed and issued)

   • IP assignment agreements from founders, employees, and contractors

   • Licenses in/out (software, data, technology)

   • Documentation of proprietary technology or trade secrets

4. Team & HR

   • Employee offer letters and contracts

   • Advisor and consultant agreements

   • Employee handbook and company policies

   • Summary of benefits and compensation plans

   • Immigration/visa documentation (if applicable)

   • Details of any disputes or terminations

5. Commercial & Operational

   • Customer and supplier contracts

   • Sales pipeline and key customer list

   • Partnership and channel agreements

   • Product roadmap and development documentation

   • Key business metrics (growth, churn, retention, etc.)

6. Litigation & Compliance

   • Details of any past, pending, or threatened litigation

   • Regulatory correspondence and compliance certifications

   • Insurance policies (D&O, general liability, etc.)

7. Miscellaneous

   • Press releases and public communications

   • Board and investor presentations

   • Any other material agreements or documents

Key Considerations for Founders

• Start organizing early—don’t wait until diligence is requested.

• Keep everything digital and well-labeled (consider a secure data room).

• Address gaps or inconsistencies before sharing with investors.

• Be transparent about risks and how you’re mitigating them.

Key Considerations for Investors/Buyers

• Verify the accuracy and completeness of each item.

• Pay special attention to ownership of IP, cap table integrity, and unresolved legal issues.

• Use the checklist to identify red flags or areas needing further investigation.

Summary: A well-prepared due diligence checklist is a founder’s best tool for building credibility, streamlining deals, and avoiding surprises. Use this as a living document—update it regularly as your business grows and evolves.