Rounds & fundraising
What is Due Diligence?
The investor's verification process - financial, legal, commercial, technical - that happens between term-sheet and close.
Due diligence is the investor's deep verification of everything the company has represented. It typically covers: financial (revenue accounting, runway model, contracts), legal (corporate structure, IP ownership, employment agreements, cap table accuracy), commercial (customer references, churn analysis, pipeline), and technical (code audit, security posture). A well-prepared data room (organized files, signed agreements, cap table reconciliation) can compress DD from weeks to days. Major DD findings can lead to renegotiated terms or, occasionally, a pulled deal.