The VC Brief

Educational only — not investment, legal or tax advice.

Signing a term sheet feels like the finish line. It is not. Most term sheets are non-binding on the economics, and the weeks after signing are due diligence: the investor and their lawyers check that what you pitched is what actually exists. Deals rarely collapse with a dramatic “no”. They stall because something turns up that takes too long to fix.

The good news is that almost everything investors look at can be prepared before you raise.

1. Financials

• Bank statements that match the revenue and burn you pitched.
• Revenue broken down by customer and by month, and an explanation of how you define it (booked, billed, recognised).
• A current budget and runway estimate.
• Tax filings and any outstanding liabilities.

Common problem: metrics in the deck calculated differently from the books. Use one definition everywhere.

2. Corporate and legal

• Certificate of incorporation, bylaws and every board and shareholder consent.
• Signed agreements with your largest customers and suppliers.
• Any past or current disputes, claims or regulatory issues.

Common problem: missing board approvals for past option grants or financings. These can be fixed, but it takes time.

3. Intellectual property

• Every founder, employee and contractor has signed an agreement assigning their work and inventions to the company.
• Ownership of domains, code repositories and trademarks sits with the company, not an individual.
• Use of open-source code is consistent with its licences.

Common problem: a co-founder who left, or an early contractor, never signed an IP assignment. Investors will insist it is fixed before closing.

4. Cap table

• A complete, reconciled list of every share, option, warrant and SAFE, with a pro-forma view after the new round.
• Option grants matching board approvals and the option plan.
• 83(b) elections filed for founder shares, where relevant.

Common problem: promises of equity made in emails or chats that were never documented. Disclose them early.

5. Team and employment

• Offer letters and employment agreements, with correct worker classification.
• Founder vesting and any acceleration terms.
• Key-person background, which investors may check through references.

6. Customers and product

• Investors may ask to speak with several customers.
• Churn, retention and pipeline data that matches what you showed.
• A security overview if you handle customer data.

The checklist

Set up a shared folder (a “data room”) with these sections before your first investor meeting:

1. Corporate documents and all consents
2. Cap table and pro forma, plus all SAFEs and notes
3. Financial statements, bank statements, budget
4. Key contracts (customers, suppliers, partners)
5. IP assignments for everyone who has built anything
6. Employment agreements and option grants
7. Metrics definitions and the raw data behind them
8. Customer references willing to take a call

From the investor’s side of the table. At Ocean Capital in Lisbon I managed full investment cycles alongside Portuguese venture funds, and coordinating due diligence is a large part of that work. The six areas above are where that work goes. Founders who have each one ready before the first meeting give the investor fewer reasons to slow down.

A friend’s company was profitable and growing, and we were close to closing a large round. Then a consulting supplier he had hired threatened to contact the investors if he replaced them, and did. Before you raise, make sure every adviser and supplier is under a contract with confidentiality and real penalties. One email can cost you a round.

The short version

Diligence rewards founders who did the paperwork early. An organised data room makes a deal close faster and signals exactly the kind of operator investors want to back.

Sources

• Cooley GO glossary: Due diligence
• NVCA model legal documents

Written by Fabian Cisneros. Educational only — not investment, legal or tax advice. See the full disclaimer.