# Due diligence

> Due diligence is the investigation a fund carries out before investing, to check that what the company says is true and that nothing serious enough to stop the deal is hidden. At venture stages it usually covers the team, market, product, customers and revenue, financial records, legal structure, cap table and intellectual property. The depth grows with the stage of the company and the size of the cheque.

Source: https://delsivo.com/glossary/due-diligence · Updated 2026-11-06

## Key takeaways

- Diligence tests claims; screening only decides whether a deal is worth testing.
- Early-stage diligence leans on founders, customers and documents more than on audited numbers.
- Keep the original claim next to what you found, so the memo shows both.

## What venture due diligence covers

| Area | Typical question | Typical evidence |
| --- | --- | --- |
| Customers and revenue | Are the customers and revenue figures real and defined consistently? | Contracts, invoices, billing exports, customer calls |
| Product | Does it work as described, and who owns the code? | Demo, architecture notes, IP assignments |
| Team | Can these founders build this company? | Interviews, references, prior work |
| Legal and cap table | Who owns what, and are there surprises? | Incorporation papers, cap table, SAFEs, notes |
| Market | Is the opportunity as large as claimed? | Bottom-up sizing, customer interviews |

## An example of a claim under diligence

A deck says the company has 20 enterprise customers. In the founder interview, the founder clarifies that 12 of them are unpaid pilots. Good diligence keeps both statements, labels the first as founder reported, asks for contracts and invoices, and writes the memo from the corrected figure. Nobody has to have lied for the two numbers to differ: they used different definitions.

## How diligence fits a fund's process

Some funds do most diligence before a term sheet; others sign a term sheet and then run confirmatory diligence before closing. Either way, the work is a list of requests to the founders, documents in a [data room](https://delsivo.com/glossary/data-room), calls with customers and references, and notes that feed the memo. [Delsivo's claim tracker](https://delsivo.com/claims-and-evidence), planned for the Pilot release, keeps each claim with its source and an evidence label: Founder reported, Corroborated, Disputed or Unresolved.

## Common confusions

- Screening versus diligence: screening decides whether to spend time; diligence decides whether to invest.
- Diligence is not an audit. It reduces uncertainty; it cannot remove it.
- Commercial, legal and technical diligence are parts of one process, often run by different people.

## Frequently asked questions

### How long does venture due diligence take?

It varies with stage, cheque size and how organised the company is. Seed diligence can be a few weeks; later rounds take longer and involve lawyers and accountants.

### Who pays for due diligence?

Funds usually bear their own diligence costs. In priced rounds, term sheets often ask the company to cover the lead investor's legal fees up to a cap.

### What is confirmatory due diligence?

The checking done after a term sheet is signed and before closing, to confirm that documents and facts match what the fund was told.

## Related pages

- [VC due diligence checklist](https://delsivo.com/templates/vc-due-diligence-checklist)
- [Claims and evidence](https://delsivo.com/claims-and-evidence)
- [VC due diligence process](https://delsivo.com/vc-due-diligence-process)
- [Data room](https://delsivo.com/glossary/data-room)