Funding & Investment

Due Diligence

Also Known As

DDInvestment Due Diligence

Due diligence is the comprehensive investigation and analysis process conducted before making an investment or acquisition, examining business, financial, legal, and technical aspects of the target company.

What is Due Diligence?

Due diligence is the homework investors do before writing a check. It's the process of verifying information, identifying risks, and confirming that an investment is sound.

Due Diligence Areas

Business DD: Market, competition, strategy
Financial DD: Revenue, burn, projections
Legal DD: Corporate structure, IP, contracts
Technical DD: Technology, architecture, code
Team DD: Background, references
Customer DD: References, satisfaction

DD Process Timeline

Stage	Duration
Seed	2-4 weeks
Series A	4-8 weeks
Series B+	6-12 weeks
Acquisition	8-16 weeks

DD in Venture Studios

Studios conduct DD differently:

Internal validation replaces much early DD
Studios know portfolio deeply
External investors DD the studio + company
Reduced information asymmetry

Example Usage

“After two weeks of due diligence, the investors were ready to issue a term sheet.”

More Funding & Investment Terms

Pre-Seed Funding

Pre-seed funding is the earliest stage of external startup financing, typically used to validate an idea, build an initial prototype, or support founders before product-market fit.

Seed Funding

Seed funding is the first significant round of venture capital financing, typically raised after initial product validation to hire a team, develop the product, and achieve early growth milestones.

Series A

Series A funding is typically the first major venture capital round after seed, raised when a startup has proven its business model and is ready to scale operations, team, and customer acquisition.

Limited Partner

A Limited Partner (LP) is an investor who commits capital to a venture fund (including venture studio funds) but has limited liability and no involvement in day-to-day investment or operational decisions.

General Partner

A General Partner (GP) is the managing partner of a venture fund who makes investment decisions, manages portfolio companies, and has unlimited liability for the fund's obligations.

View All Glossary Terms