Module 4: Due Diligence Preparation
Prepare comprehensive due diligence materials and organize documentation to streamline the investor review process.
Module Progress0 of 8 tasks completed
Week 1: Legal & Corporate Structure Preparation
Organize all legal documents and corporate structure information that investors will review during due diligence.
Conduct comprehensive legal document audit
Review and organize all legal documents including incorporation, contracts, IP, and compliance materials.
⏱️ 4 hoursLegal document managementChecklist templates📋 Complete legal document inventory
Create detailed capitalization table
Build comprehensive cap table showing all equity holders, option pools, and potential dilution scenarios.
⏱️ 2 hoursCap table softwareEquity management toolsFundraising calculators*📋 Detailed cap table with scenarios
Document intellectual property portfolio
Catalog all intellectual property including patents, trademarks, copyrights, and trade secrets.
⏱️ 3 hours📋 IP portfolio documentation
Review regulatory and compliance status
Assess compliance with industry regulations, data protection laws, and licensing requirements.
⏱️ 2 hoursCompliance checklistsLegal consultation📋 Compliance status report
Due Diligence Categories
Legal Due Diligence
2-4 weeks
Review of legal structure, contracts, and compliance
Required Documents:
- • Certificate of incorporation and bylaws
- • Board and shareholder resolutions
- • Capitalization table and equity records
- • Stock purchase agreements and option plans
- • Material contracts and partnerships
- • +5 more...
Key Focus Areas:
- • Corporate structure and governance
- • Intellectual property ownership
- • Employment and contractor compliance
- • Regulatory compliance status
- • Material agreements review
Led By:
Legal counsel and corporate secretary
Financial Due Diligence
3-5 weeks
Analysis of financial performance, projections, and accounting
Required Documents:
- • Audited financial statements (3+ years)
- • Monthly management accounts
- • Cash flow statements and projections
- • Budget vs. actual performance
- • Revenue recognition policies
- • +5 more...
Key Focus Areas:
- • Revenue quality and sustainability
- • Profitability and unit economics
- • Cash flow management
- • Financial controls and reporting
- • Tax compliance and planning
Led By:
CFO and accounting team
Commercial Due Diligence
2-3 weeks
Assessment of market position, customers, and growth prospects
Required Documents:
- • Customer contracts and agreements
- • Sales pipeline and forecasts
- • Marketing and customer acquisition data
- • Competitive analysis and positioning
- • Market research and sizing
- • +5 more...
Key Focus Areas:
- • Market opportunity and dynamics
- • Customer base and concentration
- • Competitive positioning
- • Growth strategy and execution
- • Product differentiation
Led By:
CEO and business development team
Technical Due Diligence
2-4 weeks
Review of technology, product, and development capabilities
Required Documents:
- • Technical architecture documentation
- • Product development roadmap
- • Code repositories and documentation
- • Security policies and procedures
- • Data privacy and protection measures
- • +5 more...
Key Focus Areas:
- • Technology architecture and scalability
- • Product development capabilities
- • Security and data protection
- • Technical team expertise
- • Technology risks and dependencies
Led By:
CTO and engineering team
Document Preparation Guide
Corporate Documents
CriticalEssential legal and corporate structure documents
Required Documents:
- • Articles of incorporation and bylaws
- • Board resolutions and minutes
- • Stockholder agreements and voting trusts
- • Stock ledger and capitalization table
- • Stock option and incentive plans
- • Director and officer insurance policies
Preparation Tips:
- • Ensure all documents are current and properly executed
- • Have legal counsel review for completeness
- • Organize chronologically for easy review
- • Include all amendments and modifications
Common Issues:
- • Missing board resolutions
- • Outdated bylaws or articles
- • Incomplete stock records
- • Unsigned documents
Financial Records
CriticalComprehensive financial performance and projections
Required Documents:
- • Audited financial statements (3 years minimum)
- • Monthly/quarterly management accounts
- • Cash flow statements and forecasts
- • Revenue and customer analysis
- • Budget vs. actual variance reports
- • Tax returns and compliance records
Preparation Tips:
- • Ensure consistency across all financial documents
- • Prepare detailed notes and explanations
- • Include supporting schedules and reconciliations
- • Have accountant or CFO review thoroughly
Common Issues:
- • Inconsistent revenue recognition
- • Poor financial controls
- • Missing supporting documentation
- • Unrealistic projections
Commercial Information
HighMarket, customer, and competitive positioning data
Required Documents:
- • Customer contracts and agreements
- • Sales and marketing materials
- • Market research and analysis
- • Competitive landscape assessment
- • Product roadmap and specifications
- • Customer testimonials and case studies
Preparation Tips:
- • Anonymize sensitive customer information
- • Prepare executive summaries for complex materials
- • Include quantitative metrics and KPIs
- • Organize by customer segment or product line
Common Issues:
- • Customer concentration risks
- • Weak competitive differentiation
- • Unclear market sizing
- • Limited customer validation
Technical Documentation
HighProduct, technology, and development information
Required Documents:
- • Technical architecture diagrams
- • Product development documentation
- • Security and compliance certifications
- • Code repositories and version control
- • Quality assurance procedures
- • Scalability and performance data
Preparation Tips:
- • Create high-level architecture overviews
- • Document key technical decisions and rationale
- • Include security and compliance measures
- • Prepare technical team bios and capabilities
Common Issues:
- • Poor code documentation
- • Security vulnerabilities
- • Scalability concerns
- • Technical debt issues
Investor Data Room Structure
01. Corporate Structure
High Security
Legal entity and governance documents
Subfolders:
- • Incorporation Documents
- • Board Materials
- • Stockholder Information
- • Equity and Options
- • Corporate Policies
Access Level:
Full access for lead investors
02. Financial Information
High Security
Financial statements and performance data
Subfolders:
- • Audited Financial Statements
- • Management Accounts
- • Projections and Budgets
- • Tax and Compliance
- • Banking and Credit
Access Level:
Full access for qualified investors
03. Commercial & Market
Medium Security
Market analysis and commercial information
Subfolders:
- • Market Research
- • Customer Information
- • Sales and Marketing
- • Competitive Analysis
- • Product Information
Access Level:
Tiered access based on investor stage
04. Technology & IP
High Security
Technical documentation and intellectual property
Subfolders:
- • Technical Architecture
- • Intellectual Property
- • Development Process
- • Security and Compliance
- • Technology Partnerships
Access Level:
Technical review team only
05. Legal & Compliance
High Security
Legal agreements and regulatory compliance
Subfolders:
- • Material Contracts
- • Employment Agreements
- • Regulatory Compliance
- • Litigation and Disputes
- • Insurance
Access Level:
Legal review team
06. Team & Operations
Medium Security
Team information and operational procedures
Subfolders:
- • Management Team
- • Organization Chart
- • Employee Handbook
- • Operational Procedures
- • Advisory Board
Access Level:
Standard investor access
Common Due Diligence Questions
Business Model & Strategy
Common Questions:
- • How do you make money and what are your unit economics?
- • What is your competitive advantage and moat?
- • How large is your addressable market and growth potential?
- • What are the key risks to your business model?
- • How do you plan to scale customer acquisition?
Preparation Strategy:
- • Prepare detailed unit economics analysis
- • Document competitive differentiation clearly
- • Create bottom-up market sizing models
- • Identify and address key risk factors
- • Show proven customer acquisition channels
Financial Performance
Common Questions:
- • What are your key financial metrics and trends?
- • How do you recognize revenue and what are the key assumptions?
- • What is your cash burn rate and runway?
- • How accurate have your previous projections been?
- • What are your working capital requirements?
Preparation Strategy:
- • Prepare comprehensive financial dashboard
- • Document revenue recognition policies
- • Create detailed cash flow projections
- • Show historical forecast accuracy
- • Analyze working capital needs
Team & Organization
Common Questions:
- • Who are the key team members and what are their backgrounds?
- • What is your organizational structure and reporting lines?
- • How do you attract and retain top talent?
- • What are your key person risks?
- • What is your hiring plan and compensation philosophy?
Preparation Strategy:
- • Prepare detailed team bios and backgrounds
- • Create clear organizational charts
- • Document recruitment and retention strategies
- • Identify succession planning for key roles
- • Outline compensation and equity policies
Technology & Product
Common Questions:
- • What is your technology architecture and how does it scale?
- • What are your key product development priorities?
- • How do you ensure security and data protection?
- • What are your main technology risks and dependencies?
- • How do you measure product performance and user engagement?
Preparation Strategy:
- • Document technical architecture and scalability
- • Create product roadmap with priorities
- • Outline security and compliance measures
- • Identify technology dependencies and risks
- • Prepare product metrics and user analytics
Legal & Regulatory
Common Questions:
- • What are your key legal and regulatory requirements?
- • Do you have any ongoing litigation or disputes?
- • How do you protect your intellectual property?
- • What are your main contract terms and customer agreements?
- • Are there any regulatory changes that could impact your business?
Preparation Strategy:
- • Document regulatory compliance status
- • Disclose any legal issues or disputes
- • Catalog intellectual property portfolio
- • Summarize key contract terms
- • Monitor regulatory developments