Due diligence
The investor's structured verification of a company's claims across team, technology, market, legal and finance, before money moves.
Due diligence is the verification phase of an investment: the period, mostly between term sheet and closing, when the investor tests what the pitch asserted; serious deeptech leads front-load the technical workstream before they price. The standard workstreams are corporate and legal (incorporation, contracts, litigation, IP ownership), financial (accounts, runway model, cap table), commercial (market, customers or letters of intent), team (references, background) and, in deeptech, technical diligence with domain experts.
Two findings categories matter differently. Confirmatory findings adjust detail: a contract to amend, a number to restate. Red flags reprice or kill: IP not actually assigned to the company, an undisclosed liability, a claimed result that does not replicate, a cap table that does not reconcile. Most diligence failures trace to surprises, not to weaknesses; a weakness disclosed early with a plan reads as maturity, the same weakness discovered in week five reads as concealment.
Diligence runs in both directions. The founder is entitled to references on the fund: how it behaved in its last down round, whether reserves exist for follow-on, what its board members are like under stress. The investor who resents reverse diligence is answering it.
Quantum diligence has a workstream SaaS deals do not: technical DD by external experts who read your claims against the published state of the art, your coherence times against the literature, your roadmap against what physics has actually demonstrated. Pre-revenue, the rest of the exercise concentrates on milestone evidence, the university IP chain, grant agreements and cap table cleanliness; a founder who has prepared those four files controls the timeline instead of suffering it.
From definition to decision
Model this in your own round, scenarios, dilution and runway, in the founder workspace.