What is due diligence and what documents do investors typically request?

Full Explanation

Typical due diligence request list: 1) Cap table (current shareholders and percentage ownership), 2) Financials (last 3 years P&L, balance sheet, cash flow forecast), 3) Customer contracts (20 largest customers, deal terms, contract lengths), 4) Incorporation documents (articles of association, bylaws, board resolutions), 5) IP documentation (patent filings, trademark registrations, software escrow), 6) Leases (office, equipment, any major commitments), 7) Employee agreements (standard employment contract, option plan documents), 8) Banking and insurance (credit lines, D&O insurance, key-person insurance), 9) Tax returns (founder and company), 10) Background checks (criminal record check on founders). For founders, prepare a data room (digital folder) with all documents organised and accessible — this demonstrates operational maturity. Red flags investors watch for: missing documentation, inconsistent cap table numbers, undisclosed liabilities, founder disputes, pending lawsuits. For IP specifically, investors want evidence you own the technology: assignment agreements from founder to company, open-source disclosure (if using OSS), and freedom-to-operate analysis (confirming you're not infringing patents). Opagio helps companies articulate their IP value systematically, making due diligence smoother.

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