Introduction
Startup Due Diligence is the foundation of every successful fundraising round. In this educational guide, we explore a 147-Point Due Diligence Checklist—a complete Investor Evaluation Criteria framework used by venture capitalists across India.
From financial to legal, operational to technical, each component plays a critical role in shaping investor perception. Whether you are building traction in the Venture Capital India ecosystem or preparing your first pitch deck, mastering this checklist ensures you stay ahead.
Why Startup Due Diligence Is Crucial in Today’s Funding Landscape
Startup Due Diligence is the structured process investors use to verify a startup’s viability. This 147-Point Due Diligence Checklist covers financial, legal, operational, technical, and market aspects to help founders meet Investor Evaluation Criteria and attract funding in the Venture Capital India ecosystem.
For founders, Startup Due Diligence is not just about compliance—it’s about trust. Venture capitalists rely on this process to verify claims, assess risks, and evaluate startup potential.
In Venture Capital India, scrutiny levels are rising. Investors compare your startup against a detailed Due Diligence Checklist and strict Investor Evaluation Criteria. A well-prepared founder anticipates questions and demonstrates readiness.
Alignment with Investor Evaluation Criteria
VCs judge startups on several benchmarks:
- Founding team experience and commitment
- Market scalability and product-market fit
- Financial accuracy and transparency
- Legal and compliance hygiene
- Competitive moat and defensibility
Using a structured Due Diligence Checklist helps ensure each area meets expectations.
Common Red Flags in Startup Due Diligence
During Startup Due Diligence, investors often pause when they see:
- Gaps in financial documentation
- Unclear ownership of intellectual property
- Legal disputes or compliance issues
- Missing licenses or permits
- Overly optimistic growth projections
Eliminating these early signals maturity and preparedness.
The 147-Point Framework for Startup Due Diligence
Below is an overview of the primary sections in the comprehensive Due Diligence Checklist used by Indian venture capitalists.
Financial and Accounting Due Diligence (≈ 40 Points)
Financial clarity builds investor confidence. Ensure:
- Complete audited statements and tax filings
- Consistent revenue recognition policies
- Documented capital structure and equity allocations
- Transparent burn rate, unit economics, and runway analysis
- Detailed use-of-funds and projections with assumptions
Legal and Compliance Due Diligence (≈ 35 Points)
Legal structure defines ownership and accountability. Include:
- Updated incorporation certificates and amendments
- Founder and shareholder agreements
- IP assignments and registrations
- Employment contracts and ESOP plans
- Licenses and regulatory approvals relevant to India
- Disclosure of ongoing or past litigations
Operational and Team Evaluation (≈ 30 Points)
Operational soundness ensures scalability. Review:
- Defined org chart and reporting structure
- Documented business processes
- Supplier and partner agreements
- Human resource policies and retention strategies
- Team competency evidence
Technical and Product Evaluation (≈ 20 Points)
Technical stability determines scalability and defensibility. Cover:
- Product architecture documentation
- Code ownership verification
- Quality assurance and data protection measures
- Technology roadmap with milestones
- Security, cloud, and data-backup policies
Market and Strategy Evaluation (≈ 22 Points)
Market strength and differentiation drive valuations. Show:
- TAM, SAM, and SOM analysis
- Customer validation and traction metrics
- Competitor benchmarking
- Pricing strategy and growth channels
- Exit or expansion strategy
Preparing Documentation for Startup Due Diligence
A clean data room accelerates investor trust. Use your Due Diligence Checklist to prepare:
- A master index linking every document to checklist points
- Version-controlled, dated files
- Summaries and memos for complex data
- Secure, access-controlled folders for sensitive data
Documentation Best Practices
- Use consistent naming and folder structures
- Match documents with Investor Evaluation Criteria
- Highlight changes or unusual terms clearly
- Include both soft (digital) and hard copies when needed
Addressing Investor Concerns Proactively
Anticipating investor doubts makes your Startup Due Diligence smoother.
Unrealistic Financial Projections
Support assumptions with real data and conservative forecasting.
Unclear Intellectual Property
Document IP ownership, patents, or trademarks explicitly.
Team Capability Gaps
Showcase core leadership roles, responsibilities, and succession planning.
Weak Market Understanding
Use customer insights and competitor analysis to validate strategy.
The Role of Venture Capital India in Shaping Due Diligence
The rise of Venture Capital India has professionalized investor scrutiny. Funds now adopt global-standard due diligence methods. Indian founders must meet international compliance norms while presenting local market adaptability.
Investors expect founders to know the nuances of fundraising law, governance structures, and exit planning. Mastering Startup Due Diligence bridges that gap and sets you apart.
Final Thoughts
In conclusion, Startup Due Diligence is your gateway to funding success. The 147-Point Due Diligence Checklist provides a complete framework to meet every Investor Evaluation Criteria that matters.
Preparation, transparency, and structure signal professionalism—qualities every investor rewards.
If you’re seeking guidance to implement this checklist or enhance your investor readiness, explore how ParsBEM Consultants Private Limited supports startups. They specialize in helping early-stage ventures refine diligence frameworks, align with investor expectations, and access funding opportunities. Many founders discover that their journey to capital becomes smoother once they apply ParsBEM’s strategic approach.
Comments are closed