Seed-Stage Due Diligence Checklist: What Investors Will Ask For

Due diligence at seed is lighter than at later stages, but it still catches founders out. Not because anything is wrong, but because the paperwork is scattered across email, personal drives and an accountant's inbox. A clean data room prepared in advance can shave weeks off closing and makes you look like a team that has its act together.

Use this checklist to build your data room before you start pitching. You won't need every item. Investors will ask for different things depending on your sector and stage. But having most of it ready means you're never scrambling.

How investors approach seed diligence

At seed, investors usually split diligence into two parts:

• Business diligence happens before the term sheet: market, product, customers, team and metrics. It answers "do we want to invest?"
• Confirmatory or legal diligence happens after: corporate documents, cap table, IP and contracts. It answers "is everything as described?"

Business diligence decides whether you get a term sheet. Legal diligence decides how fast you close. Both go faster with a good data room.

1. Corporate and legal records

• Certificate or articles of incorporation and any amendments.
• Bylaws or equivalent constitutional documents.
• Board and shareholder resolutions, especially for share issuances and option grants.
• Good standing certificate, where your jurisdiction provides one.
• List of subsidiaries and any foreign registrations.
• Any past or pending litigation, disputes or regulatory correspondence.

2. Cap table and securities

• Fully diluted cap table, reconciled to the legal share register.
• All share purchase agreements and stock certificates or equivalents.
• Every SAFE, convertible note and warrant, with signed copies.
• Option plan document and every option grant agreement.
• Founder share agreements with vesting terms.
• Any tax elections connected to founder or employee shares where relevant (for example, 83(b) elections in the US).
• Any side letters giving investors special rights.

Investors' lawyers will check every number. If your cap table and documents don't match, expect questions. Our guide on how to read a cap table covers what should be in it.

3. Intellectual property

For most startups, IP is the main asset. Investors want to know the company actually owns it.

• IP assignment agreements signed by every founder, assigning anything they built before incorporation.
• Invention assignment and confidentiality agreements for every employee and contractor.
• List of patents, patent applications, trademarks and domain names, with ownership confirmed.
• Open-source software policy and a summary of major open-source components and their licences.
• Any IP licensed from third parties, including universities.

The single most common seed-stage diligence issue is a founder or early contractor who never signed an IP assignment. Fix this before you raise. It's usually a simple document, but it becomes awkward if the person has since left on bad terms.

4. Material contracts

• Customer contracts, especially the largest ones and any with unusual terms (exclusivity, most-favoured pricing, termination for convenience).
• Pilot agreements and letters of intent.
• Key supplier and partner agreements.
• Office leases.
• Loans, credit facilities or grants with conditions attached.
• Any agreement containing change-of-control clauses.

5. Financial information

• Monthly management accounts for the last 12 to 24 months, or since founding.
• Most recent annual accounts and tax filings.
• Bank statements to confirm cash position.
• Current budget and the financial model behind your raise.
• Revenue breakdown by customer, showing concentration.
• Details of any government grants or tax credits claimed or pending.
• Outstanding liabilities, including deferred salaries or unpaid contractor fees.

Seed investors don't expect audited accounts. They do expect that your numbers are consistent and that the metrics in your deck can be traced back to source data.

6. Metrics and customers

• A metrics sheet with clear definitions: what counts as an active user, how you calculate MRR, how churn is measured.
• Cohort retention data.
• Sales pipeline with stages and expected close dates.
• A list of customers investors can contact as references, with their permission.
• Customer acquisition cost and payback calculations if you have enough data.

Be precise with definitions. If you call something ARR, make sure it's actually annualised contracted recurring revenue, not one-off services or a run rate from your best month. Investors will check, and loose definitions damage trust far more than modest numbers do.

7. Team and employment

• Organisation chart.
• Employment agreements and contractor agreements.
• Founder bios and references.
• Details of any employee disputes or departures on bad terms.
• Compliance with employment rules, including correct classification of contractors.

Investors may also do informal background checks on founders, including reference calls with former colleagues. Expect this and, ideally, offer a few references proactively.

8. Product and technology

• Product roadmap.
• Architecture overview for technical products.
• Security practices, data handling and any certifications or plans.
• Privacy policy and compliance with applicable data protection laws.
• For regulated sectors (health, finance, education), a summary of the regulatory position and any licences.

How to set up the data room

A shared folder with clear permissions is enough at seed. Some practical tips:

• Number the folders to match a checklist like the one above, so investors can find things.
• Use clear file names like "2025-06 SAFE - Jane Smith - $50k.pdf" rather than "scan0034.pdf".
• Keep a summary index at the top level.
• Control access in stages. Share a light version early and the full version only with investors who have issued or are about to issue a term sheet.
• Watermark sensitive files and avoid sharing customer contracts with investors who back competitors.

Your own diligence on investors

Diligence runs both ways. While investors check your documents, you should be checking them: talking to founders they've backed, understanding their decision process and reviewing their usual terms. Our guide to researching VC firms covers this.

A quick readiness score

If you can tick all six, you're in good shape for a seed round. If not, fix the gaps before you start pitching rather than in the middle of closing.

Questions investors will ask during business diligence

Documents are only half of diligence. Before a term sheet, expect a series of conversations covering the questions below. Prepare short, honest answers and supporting data for each.

Market

• Who exactly is your customer, and how many of them are there?
• How do they solve the problem today, and what does that cost them?
• Why is now the right time for this product?

Product and traction

• Which customers use the product most, and why?
• What do customers who stopped using it say?
• Can we speak to two or three customers directly?

Go-to-market

• How did your current customers find you?
• What does it cost to acquire a customer, and how long until you earn it back?
• What's your sales cycle and who signs off on the purchase?

Team

• How did the founders meet, and how do you make decisions together?
• What are the next three hires and why?
• Who are your references from previous roles?

Financing

• What milestones will this round get you to?
• What happens if the round takes longer to close than planned?
• Who else is participating or considering the round?

If you can answer all of these crisply and back them up with data from your data room, diligence tends to become a formality rather than a hurdle.

Red flags that slow or kill deals

• Metrics in the deck that don't match the underlying data.
• A departed cofounder with a large unvested or disputed stake.
• Undisclosed SAFEs, loans or side agreements discovered by lawyers.
• Key customer contracts that can be cancelled at will or have not actually been signed.
• Unresolved IP ownership, especially code written by contractors.

None of these is necessarily fatal on its own if disclosed early. Discovered late, they undermine trust, which is much harder to repair.