Due Diligence
The investigation an investor runs before finalising an investment.
Due diligence is the verification stage between term sheet and money in the bank. It covers financials, legal structure, cap table, contracts, IP ownership, and customer references.
At seed it may take two weeks and focus on the team and the cap table. At Series A it is longer and harder, with cohort analysis, unit economics and customer calls.
The most common causes of failure are structural rather than commercial: unclear IP assignment, undocumented equity promises, and missing contractor agreements. All are cheap to fix early and expensive to fix under time pressure.