As a startup founder, one of the most pivotal steps in securing funding is the due diligence process. It’s the point where investors dig deep into the financial, legal, and operational health of your business. Being prepared and organized is crucial to make the process as smooth as possible.
So, what should you have ready when the time comes? Here’s a quick checklist of the typical documents investors will request:

Corporate Records: Articles of incorporation, shareholder agreements, stock option plans.

Financial Records: Cap table, audited financial statements, tax returns, budgets, and revenue projections.

Contracts: Key customer/vendor agreements, partnership contracts, leases.

Intellectual Property: Patents, trademarks, copyrights, and documentation of trade secrets.

Regulatory Compliance: Licenses, permits, and records proving adherence to relevant laws.

Management & Personnel: Organizational chart, employee agreements, Proprietary Information and Inventions Agreements (PIIA).
Investors want to see that you’re not just passionate but that your company is backed by a strong legal and financial foundation.


Working with Your Legal Counsel: Engaging with your legal team early on can make all the difference in the due diligence process. Here are some steps to ensure you’re ready:

Conduct an Internal Review: Before investors begin their review, do your own internal audit with your counsel. Identify any potential red flags and address them proactively.

Organize and Update Documents: Ensure everything is up-to-date and easily accessible. Work with your legal team to review contracts, intellectual property filings, and corporate records for accuracy.

Remediate Legal and Compliance Issues: If any issues arise, resolve them before the process starts. Whether it’s drafting new agreements or addressing compliance gaps, being proactive will save you time and hassle down the line.

Prepare for Investor Questions: Your legal team can help anticipate the questions investors may ask. Having well-prepared answers and supporting documentation will expedite the process and build trust with potential investors.

Pro Tip: Maintaining good corporate hygiene from day one can help reduce legal costs during due diligence. Keep all your corporate documents well-organized and accessible on a cloud platform. When it’s time to open a data room, everything will be in place, saving valuable time and resources.

Conclusion: Preparing for investor due diligence is a critical step in your fundraising journey. By being thorough and organized, you can demonstrate your company’s true value to investors and increase your chances of securing that crucial investment.