Due Diligence

What is Due Diligence?

Due diligence is the deep-dive investigation investors or acquirers conduct before writing a check. They verify your claims, review financials, examine legal documents, assess the team, and identify risks that might affect the deal.

Why Due Diligence Matters

For founders, due diligence is the final hurdle before closing. A messy data room, inconsistent financials, or undisclosed issues can kill a deal or result in reduced valuation. Preparation is everything.

The process typically covers financial, legal, technical, and commercial areas. Investors want to confirm that what you pitched matches reality and that no hidden landmines exist.

Preparing for Due Diligence

Start organizing your data room before you need it. Clean financials, organized contracts, clear cap table, and documented IP ownership make due diligence faster and build investor confidence.

Further Reading

Five Financial Metrics Every Series A Investor Actually Cares About

Your SaaS company raising Series A:

• Financial DD: 3 years of financials, MRR cohorts, churn analysis
• Legal DD: Customer contracts, employee agreements, IP assignments
• Technical DD: Code review, infrastructure audit, security assessment
• Commercial DD: Customer interviews, NPS data, competitive analysis

The process typically takes 4-8 weeks. Missing documents or surprises can extend this significantly or kill the deal.